Citi Research raised its rating for Goldman Sachs shares to neutral from sell, saying the bank's first-quarter poor trading results were likely an anomaly.
Goldman's stock traded down 5 percent Tuesday after the firm reported a weak March quarter. The bank missed Wall Street expectations on both sales and earnings. It surprised investors as the company has beaten profit estimates 90 percent of the time historically, according to Bespoke Investment Group.
"While 1Q fixed income trading results were disappointing, we believe it would be a mistake for investors to extrapolate these results," analyst Keith Horowitz wrote in a note to clients Wednesday. "Goldman's relative valuation within the group is more appropriate now than it was when we believe investors were not appropriately discounting the inherent volatility in trading results."
Horowitz reaffirmed his Goldman price target of $225, representing 4 percent upside from Tuesday's close.
The analyst lowered his 2017 earnings per share estimate on the bank to $18.45 from $18.65 versus the Wall Street consensus of $19.58.
"We believe that the benefit of the potential post-election improvement in regulatory and economic outlook are reflected in the current valuation. The stock appears fairly valued," he wrote.
— CNBC's Michael Bloom contributed to this story.