(Adds analyst comments, background)
Sept 10 (Reuters) - Banc of America Securities cut Goldman Sachs Group Inc’s (GS.N) third-quarter and 2008 outlook, citing continued spread widening, challenging equity markets and lower-than-expected sales, trading and investment banking activity.
Analyst Michael Hecht, who had in Aug. 22 reduced his outlook for the largest U.S. securities firm, on Wednesday cut his third-quarter earnings view further by 29 percent to $1.77 a share. He also cut his 2008 earnings view for Goldman to $12.45 a share from $14.70. Hecht, however, said Goldman was the “best-positioned” global player in high-margin investment banking businesses, with a well-diversified mix of businesses, including size and breadth of fixed income sales and trading businesses.
Goldman and Morgan Stanley (MS.N) stand to benefit from stronger customer flow activity as other firms face more substantial de-leveraging pressures, Hecht said.
But this was “...still not enough to offset recent cyclical and seasonal pressures across most capital markets businesses the last three months,” Hecht added.
The analyst cut his price target on Goldman stock to $182 from $186, and maintained his “neutral” rating.
Wall Street research analysts at Oppenheimer & Co, Merrill Lynch, Fox-Pitt Kelton, Sanford C. Bernstein, Ladenburg Thalmann & Co, Citigroup and Lehman Brothers have also cut their estimates on Goldman. Shares of the company closed at $161.67 Tuesday on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy)