Buy Goldman shares to profit from the rocky market, JP Morgan analyst says

  • JPMorgan reiterates its overweight rating and raises its price target to $280 from $275 for Goldman shares.
  • The analyst says investment banks with large stock trading businesses like Goldman will benefit from the "current strength in equity" markets.
Goldman Sachs CEO Lloyd Blankfein.
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Goldman Sachs CEO Lloyd Blankfein.

Goldman Sachs is the best bank on Wall Street and will benefit from improving market conditions, according to J.P. Morgan.

The firm reiterated its overweight rating on the bank, predicting better profits in its trading business later this year.

"Global Markets business is one of the only EPS upgrade segments we see so far in 1Q 18," analyst Kian Abouhossein wrote in a note to clients Thursday. We believe "probability of FY18/17 revenues increasing is high with an easier comp for the remaining 3 quarters of 2018. … Equity-geared IBs, UBS, MS, GS, CSG, are likely to benefit the most from this current strength in equity business."

Abouhossein raised his price target for Goldman Sachs shares to $280 from $275, representing 6 percent upside to Wednesday's close.

The analyst said the bank's equity trading business will benefit from any rise in volatility such as what happened in the market during February. He also ranked his four favorite banks over the long-term in the following order: Goldman Sachs, Morgan Stanley, Credit Suisse and UBS.

Goldman announced on Monday that David Solomon will take over as president and chief operating officer and his sole competitor for the company's CEO job, Harvey Schwartz, is retiring in April. The moves seem to put Solomon in direct line to succeed Lloyd Blankfein when he retires as CEO, amid media coverage last week on his succession plans.

The Wall Street Journal reported on Friday that Blankfein was likely to step down as soon as this year.