(Changes source; adds analyst comments, background)
Sept 11 (Reuters) - Goldman Sachs Group Inc (GS.N) may incur mark-to-market losses of about $2 billion from its remaining exposure to troubled assets, said Deutsche Bank analyst Mike Mayo, who cut his third-quarter earnings outlook for the company.
Analysts at Keefe, Bruyette, Woods also cut their quarterly profit forecast on the largest U.S. securities firm.
Shares of Goldman Sachs fell as much as 5 percent in morning trade on Thursday, after analysts cut their estimates and Lehman Brothers Holdings Inc’s LEH.N weak third-quarter results sparked worries over the health of the financial sector.
“Given the fall-off of volumes in the latter part of the quarter, drop in commodities prices, derivative volatility and poor performance for hedge funds in the quarter, we believe Goldman equities trading business could be one of the worst in years,” KBW analysts Lauren Smith and Joel Jeffrey said.
Smith and Jeffrey cut their earnings estimates on Goldman to $1.40 a share from $2.17 for the third quarter and to $13.57 a share from $14.35 for fiscal 2008.
The analysts cut their price target on the shares to $184 from $200. They have an “outperform” rating on the stock.
Deutsche’s Mayo cut his third-quarter earnings view for Goldman to $1.60 a share from $2.40 to reflect negative markdowns on principal investments and weaker-than-expected capital markets, according to a brokerage note dated Sept. 10.
Mayo rates the stock “hold.”
Wall Street research analysts at Oppenheimer & Co, Merrill Lynch, Banc of America Securities, Fox-Pitt Kelton, Sanford C. Bernstein, Ladenburg Thalmann & Co, Citigroup and Lehman Brothers have also cut their estimates on Goldman. Shares of the company were down $6.58 at $151.01 in late morning trade on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Vinu Pilakkott)