Goldman Sachs Adds Blackstone to “Conviction Buy List”

(Reuters) – Goldman Sachs added Blackstone Group (BX.N) to its “Americas conviction buy list,” and raised its price target on the asset manager’s stock, citing a better M&A cycle and an improving lending and investing environment.

Goldman also removed Och Ziff Capital Management (OZM.N) from the list, but retained its “buy” rating on the company’s stock and raised its price target to $13 from $12, saying it views trends in Och-Ziff’s business as favorable and current valuation as attractive.

“We believe the strength and consistency of Och-Ziff’s investment results throughout 2009 bodes well for the firm’s client retention and new business prospects in 2010 and beyond as hedge fund industry flows stabilize,” the brokerage said in a note to clients.

Analysts at Goldman view Blackstone as capable of seizing M&A and restructuring opportunities via a growing advisory business, and see robust earnings possibilities in its distressed funds and fund-of-funds businesses, which they feel are taking market share and driving assets under management (AuM) levels higher.

Goldman expects Blackstone’s advisory business to account for about 35 percent of revenue in 2009.

“Blackstone benefits from improving capital market trends… with ample dry powder to deploy,” the brokerage said, and raised its price target on the company’s stock to $18 from $16.

Blackstone’s shares were up 4 percent to $13.53 in trading before the bell. Och-Ziff’s shares closed at $11.24 on Wednesday on the New York Stock Exchange.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Kavita Chandran)