(GS) The Goldman Sachs Group – Bear of the Day

We are downgrading our recommendation on Goldman Sachs (GS) to Underperform from Neutral based on current general economic conditions and the company’s involvement in a number of lawsuits. Previous quarter earnings results deteriorated, owing to decreased revenue and poor performance at Institutional Client Services division, coupled with global macro-economic concerns.

Regulatory issues, including lawsuits filed against the company, might dent the company’s financials in the upcoming quarters. Our six-month price target of $88.00 equates to about 12.1x our earnings estimate for 2011. Combined with the $0.35 per share dividend, the price target implies an expected total negative return of 8.3% over that period, which is consistent with our Underperform recommendation.

The quantitative Zacks Rank for Goldman Sachs is currently #5 (Strong Sell), indicating significant downward pressure on the shares over the near term. The company reports quarterly earnings before the opening bell Tuesday.

GOLDMAN SACHS (GS): Free Stock Analysis Report

Zacks Investment Research

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