Analysts take swipe at Goldman Sachs
Trio warns that Wall Street firm is no longer immune to broader industry sluggishness; stock sinks.
NEW YORK (CNNMoney.com) -- Goldman Sachs appears to be losing some of its luster.
A trio of high-profile bank analysts cut either their rating or earnings estimates for the investment bank this week, suggesting that even the venerated Wall Street firm is not immune to the ills of the broader financial services industry.
"In short, Goldman is no longer as much in the right place at the right time, at least compared to the past year," Deutsche Bank's Mike Mayo wrote in a research note Tuesday. He lowered his rating of the firm to "neutral" from "buy" and cut his 12-month price target to $192.
That helped send Goldman Sachs (GS, Fortune 500) shares down over 3% in midday trading Tuesday.
Mayo's remarks were echoed by Oppenheimer & Co. analyst Meredith Whitney and veteran banking analyst Richard Bove of Ladenburg Thalmann. Both cut their third-quarter and full-year earnings estimates for Goldman Sachs this week.
A call to the company seeking comment was not immediately returned.
As a group, analysts are betting that the New York City-based bank will see its third-quarter profit cut in half when it reports in September. Right now, the consensus on Wall Street is for Goldman to post net income of $1.58 billion, or $3.50 a share, for the quarter.
Up to this point, Goldman Sachs has largely avoided the fate of many of its rivals, including Lehman Brothers (LEH, Fortune 500), Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) - all of whom bet big on the U.S. mortgage market and paid dearly for it when the housing bubble burst and credit markets tightened.
In the most recent quarter, for example, Goldman Sachs booked a tidy profit of $2.1 billion, handily beating analysts' estimates.
But analysts now fear that the broader troubles facing financial firms are catching up with the nation's largest investment bank.
"Business has dried up," Bove wrote in a note he published Monday. "Key drivers of revenue such as investment banking, and mergers and acquisition have simply not been happening enough to stimulate related businesses."
Both Whitney and Mayo also warned that a decline in debt and equity underwriting, as well as weaker trading volume and general weakness in the equities markets, could hurt Goldman in the months ahead.
"As [Goldman's] revenues are relatively the most equity-linked of its broker peers, the fact that broad global equity market indices are all down double-digits will have a meaningful effect on the company's earnings," Whitney wrote in a note Tuesday.
Furthermore, both the UK and Europe - areas where Goldman generates roughly a quarter of its revenue - now face slower economic growth prospects, which could also ding Goldman's results, warned Mayo.
"Near term, a turnaround in the company's earnings is not in prospect. Intermediate term does not look good either," wrote Bove. "In sum, watch out." 
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