Deutsche Bank analyst Mike Mayo cuts Goldman Sachs (GS) from Buy to Hold, citing the firm’s exposure to declining equity markets and slow growth in the U.K. and Europe. Oppenheimer analyst Meredith Whitney cites similar concerns, and cuts her Q3 estimates for the firm. Reuters:
Goldman shares were down $7.16 at $170.84 in morning trade on the New York Stock Exchange. They have lost more than 17 per cent of their value since the start of the year.
Goldman earns a fourth of its revenue from the euro zone and UK, and the expected slowdown in the regions mean the firm’s non-U.S. business is not as strong as before, Mayo said. Deutsche’s European economics team believes both regions are or will soon be in recession.
Goldman also has among the highest exposures to equities during a period of more significant equity market declines, including areas of expansion such as China, Mayo said. The result is likely to be weaker-than-expected earnings, the analyst added.
Mayo cut his price target from $209 to $192. Whitney slashed her Q3 estimates from $3.54 to $2.15 and her FY08 estimate from $15.75 to $14.32.
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