Goldman Sachs has released its list of highly trusted stocks — and there’s a new twist. The company sources buy-rated stocks from its U.S. research analysts. What makes this list different from a typical first-choice list is that members of Goldman Sachs’ investment review committee are the ones who choose the names, adding a second layer of analysis. “This new ‘Belief List – Director’s Cut’ is designed to provide investors with a curated active list of 20-25 fundamental buys that we believe to be the most differentiated in our US equity coverage into thinking,” Steven Kron, director, Americas Equity Research, wrote in a note Thursday. Take a look at some of the names on the list, and Goldman’s outlook for their futures. Bath & Body Works is a “turnaround story with new management,” according to the company. Analyst Kate McShane expects the company to outperform as revenue growth beats conservative expectations. The company found that momentum from category expansion, an improved online presence, and a loyalty program launching in 2022 should drive the company’s growth. Goldman Sachs expects the stock to rise 42% over the next 12 months. Shares are down about 16% so far this year. Pharmaceutical giant Merck also got a director’s cut. While shares are flat in 2023, the company estimates an upside of around 17% in the coming months. “MRK is building out capabilities beyond its strong oncology and vaccines franchises, opening up a meaningful runway for the development of immunology and cardiovascular treatments, a development that should allay concerns about a 2028 patent cliff,” said Goldman. Analyst Chris Shibutani noted that while Merck’s patent for its well-known oncology drug Keytruda is set to expire in 2028, the company’s underlying business remains strong. Goldman Sachs highlighted that Shibutani’s revenue and EPS forecasts for 2023 were higher than guidance and Wall Street. The firm expects Amazon shares to soar 37% over the next 12 months. Analyst Eric Sheridan said e-commerce platforms are rebounding and Amazon Web Services’ cloud business will benefit from artificial intelligence. “As e-commerce margins normalize, expect AMZN to continue to deliver strong revenue and margin performance over a multi-year investment cycle. … And AWS can still benefit from the long-tail structural growth opportunities, which could be coupled with emerging opportunities around the AI-driven computing cycle,” Goldman said. Sheridan said the tech giant’s size, platform breadth, category diversification and end-market exposure will further fuel its upside opportunities in the coming years. Finally, Warner Bros. Discovery is the media name on the list. The bank estimates an 86% upside in shares from current levels, putting it in the top five for estimated upside. “WBD represents a unique financial proposition in traditional media: a company that can achieve material EBITDA growth over the next 2-3 years from the synergies of WarnerMedia and Discovery’s recent merger – growth that should drive rapid deleveraging, This appears to be undervalued by investors,” the firm noted. The company’s new streaming service Max, a combination of HBO Max and Discovery+, is an additional catalyst for growth, according to analyst Brett Feldman. — CNBC’s Michael Bloom contributed to this report.
Goldman unveils list of top stock picks for clients. What’s on it
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