Citi thinks Goldman Sachs ‘ long-term company goals may be more difficult to reach than investors think. Citi downgraded shares of the investment bank to neutral from buy in a Tuesday note. It did, however, raise its price target to $400 per share from $370, equating to roughly 11% upside from Monday’s close. Analyst Keith Horowitz said that while Goldman management recently outlined a 15% to 17% target for return on tangible common equity (ROTCE), that goal may be somewhat lofty for the bank at this time. “While we view the ROTCE target as achievable, we also believe it will take time as well as a better investment banking environment where GS is very levered to in GBM [global banking and markets] (investment banking highest return business) and AWM [asset and wealth management] (via higher incentive fees/harvesting of gains on its on-balance sheet investments),” Horowitz wrote. The analyst added that Goldman’s ability to find growth from investments originating from its balance sheet has pushed the stock higher in the past. He cautioned, however, that investor returns will likely be closer to the lower end of Goldman managements forecasts. “The uncertainty of executing on its longer-term initiatives leads us to see more balanced risk/reward for the stock at these levels,” Horowitz said. Goldman shares are up 4.5% this year. GS YTD mountain Goldman Sachs stock has climbed more than 4% since January. — CNBC’s Michael Bloom contributed to this report.
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