October 13, 2009 / 6:37 PM / 9 years ago

UPDATE 1-RESEARCH ALERT-Analyst Whitney cuts Goldman to neutral

Oct 13 (Reuters) - Prominent banking analyst Meredith Whitney downgraded Goldman Sachs Group Inc (GS.N) to “neutral” from “buy,” citing the recent rise in share price, but said the company still had strong fundamentals.

The stock, which has risen 34 percent in the past three months, has exceeded her price target of $186, and upside could be limited over the medium term, Whitney said in a note to clients.

“We believe at current prices, the secret is out with respect to strong second half earnings, and expect the company to beat third- and fourth-quarter estimates,” the analyst said.

Shares of Goldman fell 2 percent to $186.23 Tuesday afternoon on the New York Stock Exchange. They touched a low of $185.12 earlier.

“While we are fundamentally constructive on Goldman Sachs over the long term, we prefer to invoke a ‘why be greedy’ rationale and lock in profits at these levels,” Whitney said.

The plain vanilla debt market continues to be robust and spreads continue to benefit from fewer players, but “that fact is well broadcasted at this point,” the analyst said.

In July, Goldman said quarterly earnings surged 33 percent on blowout trading results, trouncing forecasts. [ID:nN14289399]

Goldman plans to report third-quarter results on Oct. 15. (Reporting by Brenton Cordeiro in Bangalore; Editing by Deepak Kannan)

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