Goldman Sachs shares have been on a tear since last month’s presidential election.
The stock has gained about 25%, and on Thursday hit its highest level since 2007 — or before the financial crisis. The shares were down about 1.3% to $223.66 as of about 11:00 am ET Friday.
Goldman shares have also outperformed every other company on the Dow Jones Industrial Average since the election. Here’s the stock compared with the whole index:
The gains come as banks have rallied across the board. President-elect Donald Trump is expected to ease up on regulation of the banks, and his infrastructure spending plans and other policies could have an inflationary effect on the US economy which could lead to higher interest rates, which are good for bank profits in general.
But analysts also point to specific factors working in Goldman’s favour, including a “better trading environment” for the fixed income, currencies, and commodities — or FICC — business.
“GS should benefit more than peers given the company’s reliance on trading results and the greater contribution from FICC revenues toward total revenues,” KBW’s Frederick Cannon, Brian Kleinhanzl, and Allyson Boyd wrote in a note Tuesday.
“In general, we are more confident in rising rates and better trading versus wide-sweeping regulatory changes, and we believe BAC and GS offer the best exposure to both at still reasonable valuations.”
Deutsche Bank’s Matt O’Connor upgraded Goldman Sachs to a “buy” rating, saying it seems well positioned to profit from a stronger economy.
“A stronger economy should benefit many capital market businesses — including advisory, equity capital markets, and both fixed and equity trading (all areas of strength at GS),” he wrote in a recent note.
He also said he expects the firm’s recent rollout of its consumer lending platform, Marcus, to build momentum.
Trump on Wednesday appointed the former Goldman Sachs banker Steven Mnuchin Treasury secretary. Steve Bannon, Trump’s incoming chief strategist, is also a Goldman Sachs alum.
Trump is also reportedly considering Goldman Sachs President Gary Cohn for his budget chief or another role in the administration.
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