Rare Downgrade of Goldman Sachs (GS)

The Goldman Sachs Group Inc. (NYSE: GS) is being downgraded in a somewhat unusual call by the team at Zacks Investment Research.  The old and already considered a bit cautious rating of Neutral was lowered to a much more negative “Underperform” rating.  The downgrade reflects the “expectation of continued lower top-line as in 2011, coupled with the fundamental pressure on the banking sector.’  The most recent earnings showed income for the quarter but this notes that the increased operating expenses and lower equity trading revenues remain matters of concern. A concern is also that regulatory issues should dent the financials of the company in the upcoming quarters. 

We looked back at the earnings notes and have seen that Goldman Sachs listed its book value at $130.31 per common share and listed its tangible book value at $119.72 per common share. 

Zacks has a six-month price target of $98.00, and the full report can be seen here. The firm expects a negative total return of about -8%. Goldman Sachs’ stock is trading up marginally and almost at $109.00 per share.  It is also worth noting that the Thomson Reuters consensus price target on Goldman Sachs is closer to $130.00 before the effects of this research call.

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