Goldman Sachs Upgraded to Buy

NEW YORK ( TheStreet) -- Financial services firm Goldman Sachs ( GS) was upgraded to buy from hold by TheStreet Ratings on Friday.

"The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

"GS updated its European exposure with total gross exposure is $4.5 billion (this includes unfunded exposure of $0.6 billion)," Keefe, Bruyette & Woods analysts wrote in a Feb. 29 report. "Net of hedges, the total credit exposure is $2.9 billion. The largest market exposures came from Italy ($1.2 billion), Ireland ($0.9 billion) and Spain ($0.5 billion). GS also disclosed that total market exposure is $2.9 billion before hedges and $0.6 billion net of hedges. The company carries approximately $330 million of Greek sovereign bonds. Under our stress case scenario, we estimate losses of approximately $0.97 per share."

Goldman Sachs has an estimated price-to-earnings ratio for next year of 9.15 times; the average among its peers is 8.35. For comparison, both JPMorgan Chase ( JPM) and Bank of America ( BAC) have lower forward P/Es of 7.48 and 7.62, respectively.

Analysts were split on Goldman Sachs with 14 rating it buy, another 14 giving the stock a hold rating and two rating it sell.

TheStreet Ratings gives Goldman Sachs a B- grade and a $132.99 price target. The stock closed on Thursday at $121.13 and has risen 33.95% year to date.

-- Written by Alexandra Zendrian

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