Bank of America said President-elect Trump’s preference for deregulation should be particularly beneficial to Goldman Sachs. Analyst Ebrahim Poonawala told clients on Wednesday that reducing regulations could boost investor confidence that Goldman Sachs will deliver sustainable returns on equity. In fact, he said Goldman Sachs should be one of the clearest winners from such a policy shift among the big banks. “We expect Goldman Sachs to be one of the biggest beneficiaries of a more balanced regulatory environment, particularly changes in regulatory attitudes towards capital markets businesses,” Poonawalla wrote. “This should increase flexibility in capital allocation and Allowing management to optimize capital usage as it works to position the franchise to deliver full-cycle ROE in the mid-teens. To be sure, Poonawalla made no mention of taking over on Monday in his notes. Trump’s name. But the Republican candidacy has long been tied to expectations of looser corporate regulations, which may partly explain why stocks rose after his win. Poonawalla reiterated his buy rating on the bank’s stock in a note to clients. His $675 price target implies an upside of 11.4% from Wednesday’s closing price. The analyst’s comments came after Goldman reported better-than-expected fourth-quarter earnings on Wednesday, helped by strong trading results. Poonawalla isn’t the only one thinking about potential regulatory changes and the impact on the banking industry. Goldman Sachs Chief Executive David Solomon said on a post-earnings call with analysts that CEOs are feeling better since the election. “There has been a meaningful shift in CEO confidence, particularly following the U.S. election results,” Solomon said, according to FactSet records. “Additionally, sponsor backlog is large and the regulatory environment is improving,” he added. Goldman Sachs shares are up more than 6% in the new trading year, building on last year’s gains of more than 48%. —CNBC’s Jesse Pond contributed to this report.
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