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Monday, August 11, 2008

Bove: Goldman Sachs Revenue Dwindling

Associated Press

NEW YORK -- Ladenburg Thalmann analyst Richard Bove on Monday reiterated a "sell" rating on Goldman Sachs Group Inc. (GS) and cut his full-year profit estimate on the investment bank, citing dwindling revenue sources.

For the fiscal year ending November 30, Bove now expects earnings of $14.16 per share, down from a previous estimate of $15.45 per share.

Analysts polled by Thomson Financial, on average, anticipate earnings of $16.77 per share in 2008.

"Business has dried up," Bove wrote in a note to clients. "Key drivers of revenue such as investment banking, and mergers and acquisitions have simply not been happening enough to stimulate related business."

Prime brokerage and foreign activity have also faltered. What's more, Bove said he expects performance fees from the asset management division to wane.

Currency and commodities trading have prospered, but they are not enough to offset the other declining business segments, said Bove, who maintained a $154 target price on the stock.

"At the moment, the light at the end of this tunnel is very dim," Bove said. "In near term, a turnaround in the company's earnings is not in prospect."

A Goldman Sachs representative was not immediately available for comment.

Goldman Sachs' shares rose $2.05 to close at $178.