Goldman Sachs updates top stock picks, adds Deutsche Bank and Carlsberg
Goldman Sachs has revised its list of favored European stocks for November, incorporating Deutsche Bank and Carlsberg into its “Conviction List – Directors’ Cut.” The monthly publication highlights the investment bank’s preferred buy-rated companies in the region.
Several stocks on the list are projected to experience substantial gains, with three potentially yielding an upside of over 100%. Ceres Power, a U.K.-based fuel cell developer, is anticipated to see a 250% increase, while flatexDEGIRO, a Frankfurt-based fintech and online brokerage, could rise by 112%. Rheinmetall, a German defense company, maintains a favorable outlook with a price target of 2,100 euros (approximately $2,350), suggesting a 102% upside.
Conversely, HSBC, Haleon, and CTP have been removed from the list. Goldman Sachs believes Deutsche Bank is entering a new phase of profitability, particularly within its corporate and private banking divisions. Chris Hallam, a managing director and head of European financials research at Goldman, pointed to stronger revenue growth driven by government infrastructure spending, notably in defense and technology. The bank also noted a 40% reduction in HSBC’s exposure to U.S. commercial real estate since 2022, with a 20% decrease in the last year. Deutsche Bank’s shares currently trade at 8.2 times expected earnings, below the banking sector average of 9.6. The bank anticipates potential savings of approximately 2 billion euros ($2.24 billion) through technology, real estate, and operational changes, including increased adoption of cloud computing and artificial intelligence. This could boost the bank’s return on tangible equity to over 13% by 2028, surpassing current analyst estimates of 12.2%, and facilitate increased share buybacks. Goldman’s target price for Deutsche Bank is 44.25 euros ($46.90), representing a 47% potential gain.
For Carlsberg, analyst Olivier Nicolaï has set a price target of 1,200 Danish kroner ($180.10), indicating a 24% 12-month upside. Nicolaï anticipates that a broadened portfolio of soft drinks will compensate for a predicted slowdown in beer sales, especially in China. The company’s acquisition of Britvic and its PepsiCo bottling license agreements, expected in 2025, are projected to enhance profit margins. Organic sales growth is forecasted at 3.8% for 2027, exceeding consensus expectations of 3.4%. Further opportunities may arise from licensing changes in the Nordics and Baltics, a potential initial public offering in India, and a strategic partnership with Sapporo. Carlsberg’s debt reduction could also enable a resumption of shareholder buybacks.
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“Goldman Sachs adds a beer giant and a major bank to its favorite stock picks”
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