Deutsche Bank Downgrades Goldman Sachs (GS) to Hold, Citing Exposure To Equity Markets

August 12, 2008 7:35 AM EDT

Deutsche Bank's Mike Mayo downgrades Goldman Sachs (NYSE: GS) from Buy to Hold and lowers his price target from $209 to $192, citing its leverage to the equity markets.

Mayo said, "Goldman has among the highest exposures to equities (est. 35%) during a period of more significant equity market declines, including areas of expansion such as China. The result is likely to be weaker than expected earnings, which, while not of the problems of others, should show that Goldman is not immune to capital market pressures, esp. given perhaps weaker European growth (est. 1/4th of firm). We now rate the stock Hold given earnings pressure mitigated by likely market share gains. We also lower our PT to $192 from $209."

The firm is also lowering their Q3 EPS estimates from $3.25 to $2.40, which compares to the consensus of $3.64. They lower 2008 EPS estimates from $16.25 to $14.60, which compares to the consensus of $16.64. They also lowered 2009 EPS estimates from $16.20 to $15.55, which compares to the consensus of $19.78.

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Downgrades

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• Deutsche Bank
• Goldman Sachs
• Mike Mayo

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