UPDATE 3-Goldman Sachs downgraded by Deutsche Bank

martes 12 de agosto de 2008 18:03 CEST

(Adds details, adds comments from Credit Suisse analyst, updates share movement)

Aug 12 (Reuters) - Goldman Sachs Group (GS.N: Cotización) was downgraded to "hold" from "buy" by Deutsche Bank analyst Mike Mayo, who said the largest U.S. securities firm was not immune to capital market pressures, especially given its exposure to weaker European growth.

Goldman shares were down $7.06 at $170.94 in morning trade on the New York Stock Exchange. They have lost more than 17 percent of their value since the start of the year.

Goldman earns a fourth of its revenue from the euro zone and UK, and the expected slowdown in the regions mean the firm's non-U.S. business is not as strong as before, Mayo said. Deutsche's European economics team believes both regions are or will soon be in recession.

Goldman also has among the highest exposures to equities during a period of more significant equity market declines, including areas of expansion such as China, Mayo said.

The result is likely to be weaker-than-expected earnings, the analyst added.

Recent weakness in terms of equity underwriting, equities trading and private equity was hitting Goldman at its core strength, Mayo said.

He expects Goldman to "trade at a discount to its five-year average multiple given cyclical headwinds, the deteriorating credit environment, below average return on equity and newer regulatory uncertainty."

Oppenheimer & Co's influential analyst Meredith Whitney said as Goldman's revenue is more equity-linked than 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.   Continuación...