We are downgrading our recommendation on Goldman Sachs (GS) to Underperform from Neutral, based on the effects related to Securities and Exchange Commission (SEC) charges and the negative impact of new financial regulatory reform.
Litigation issues not only impact a company’s reputation but also dent its financials. Further, the new regulatory reform will continue to pressure trading revenues, which will hurt the profitability of Goldman in the upcoming quarters.
Our six-month target price of $142.00 equates to about 9.5x our earnings estimate for 2010. Combined with the $1.40 per share annual dividend, this price target implies an expected negative total return of 8.5% over that period, which is consistent with our Underperform recommendation.
GOLDMAN SACHS (GS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
Zacks Investment Research
