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The Battle of the Financials: Goldman Sachs vs. BlackRock

These are our articles posted on Seeking Alpha. Click "READ MORE" if you would like to read the rest of the articles.

Don't Bet Against Goldman Sachs

Summary

  • Goldman Sachs is at a do or die technical level.
  • The company is significantly undervalued.
  • Even by taking higher risk into account, valuation models still suggest Goldman Sachs is a bargain.

Goldman Sachs is a powerhouse investment bank and it looks like an attractive time to go long its stock.

The Goldman Sachs Group (NYSE:GS) has improved its fundamentals in recent years, and it is logical to expect even by conservative calculations that the stock is about to make a move higher. Analysts are divided or they are at least partially positive on this stock, which is expected since each analyst uses a different valuation model and different criteria. This difference of opinion hints that analysts do perform a good reality check on this stock. What would be worrisome is if they all had very similar views on modeling and evaluating risk. Despite its proven resiliency, history has shown that no financial firm is ever 100% immune to either internal corruption or to the mishandling of outside market risks... READ MORE



The Going Gets Tough For BlackRock

Summary

  • BlackRock posted weak 1st quarter FY2016 results for period ended 31 March 2016, and had announced plans for job cuts in the coming quarters in order to reduce costs.
  • The company’s business fundamentals are under tremendous pressure, with intense competition in its ETF product segment where investors are increasingly demanding lower fees.
  • Selling this stock is the right strategy, as the company has experienced slowing AUM growth in its most recent quarter, which will adversely impact revenue.
  • The stock is slightly overvalued and weak global markets, a looming China slowdown, and weak Japanese and EU economic outlook call for a sell in the medium term.

BlackRock (NYSE:BLK) is the world's largest money manager with about $4.5 trillion in AUM as of 31 March 2016. It is well known among investing circles for its iShares branded ETF products, which commanded a total of $1.2 trillion in AUM. The share price has been trending upwards since 2012 from $178 to an all-time high of $378 at the end of March 2015. The share price has suffered a pullback somewhat since end-March 2015. The stock price hit a recent low of $294 per share in September 2015 before recovering. Currently, it is trading at around $355 per share, not far from its all-time high. Weak business fundamentals in the coming quarters could spell trouble for its share price and limited upside is foreseen for BlackRock... READ MORE

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