Atlantic Equities analysts John Heagerty and Nadja Heini downgraded Goldman Sachs Group Inc. to "neutral" from "overweight."
Heagerty and Heini cited their "more cautious" outlook for investment banking revenues in 2019 for downgrading Goldman Sachs, noting that fixed-income, currencies and commodities revenues are coming under pressure and debt issuance is being hit by rising rates. The two also said they lowered forecasts for equity realizations.
The analysts cut Goldman Sachs' price target to $210 from $295 as CEO David Solomon is undertaking a comprehensive front-to-back review of the company's businesses and on concerns that the 1Malaysia Development Bhd. scandal would impact future revenues.
Atlantic Equities also retained Morgan Stanley at "overweight" as the company's "very strong" wealth management franchise provides substantial earnings stability.
The analysts lowered Morgan Stanley's price target to $55 from $66, reflecting lower comparable price/earnings multiples and a slightly higher cost of equity.