Goldman Sachs' Stock Drops Keeps Dow Negative After Citigroup Analyst Turns Bearish

By Tomi Kilgore Markets MarketWatch Pulse

Shares of Goldman Sachs Group Inc. slumped $2.58, or 1.1% in morning trade Tuesday, enough to push the Dow Jones Industrial Average into negative territory, after analyst Keith Horowitz at rival bank Citigroup Inc. turned bearish on Goldman, on the belief that investors may be too optimistic about revenue growth potential. The price decline was shaving 18 points off the Dow, which was down just 7 points. Horowitz downgraded Goldman to sell from neutral, saying the current stock valuation implies revenue growth of 18% off the 2016 base, while the FactSet revenue consensus for 2017 implies 7.6% growth. "While we expect [Goldman] to see improved trading revenues going forward, the path is relatively uncertain and the bar is relatively high," Horowitz wrote in a note to clients. Meanwhile, Horowitz raised his stock price target to $225, which is 6.4% below current levels, from $200. The stock has rocketed 32% since the election, on optimism over President-elect Donald Trump's policy promises to slash regulation and boost fiscal stimulus, which would boost longer-term Treasury yields. In comparison, the SPDR Financial Select Sector ETF has climbed 17% since the election while the Dow has gained 8.4%.

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