(Adds background, updates share movement) Nov 12 (Reuters) - Veteran banking analyst Richard Bove cut his price target on Goldman Sachs Group Inc’s (GS.N) stock by $10 to $70 and said the company could push its losses into the December stub quarter as it changes reporting dates. Shares of the company fell almost 7 percent to $69.61 in morning trade Wednesday on the New York Stock Exchange.
The company could well shock observers by producing a tiny profit in the fourth quarter as it changes reporting dates from a November fiscal year to a December year, now that it is a bank holding company, said the Ladenburg Thalmann analyst, who has a “sell” rating on the stock.
“The stub quarter in this case will be the month of December. Goldman could pile the losses in to this month which may well disappear when analysts view the company a few years from now,” he wrote in a note to clients.
Goldman Sachs became a bank holding company regulated by the U.S. Federal Reserve in September, along with Morgan Stanley (MS.N), after Lehman Brothers LEHMQ.PK failed, Merrill Lynch MER.N agreed to be bought and the financial markets went into turmoil.
The change, effectively killing off the investment banking model that had dominated Wall Street for more than 20 years, enabled Goldman and Morgan Stanley to take deposits, gain easier access to financing and gave them more flexibility to buy retail banks.
In the past two weeks, analysts at Morgan Stanley, Merrill Lynch, J.P. Morgan Securities, UBS, Fox-Pitt Kelton, Sandler O‘Neill Partners and Barclays Capital have all said they expect Goldman to post a fourth-quarter loss, which would be its first ever as a public company.
The analysts’ expectations for a loss range from $2.50 per share to 40 cents a share.
On Sept. 16, Goldman Sachs posted a 70 percent drop in quarterly profit, its biggest earnings decline since going public in 1999, as the worst market slump in decades led to weaker-than-expected revenue. (Reporting by Amiteshwar Singh in Bangalore; Editing by Amitha Rajan)