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Goldman Sachs changes price targets on banks
Goldman Sachs made several price target changes on European banks and said it expects loan growth to slow markedly against a backdrop of higher funding costs, capital pressures and softening economic growth.
- Reuters
- Published: 00:02 October 5, 2008
London: Goldman Sachs made several price target changes on European banks and said it expects loan growth to slow markedly against a backdrop of higher funding costs, capital pressures and softening economic growth.
The brokerage also added Swiss bank Credit Suisse to its pan-Europe conviction buy list and removed Natixis from its pan-Europe sell list.
"While previous credit cycles have often turned due to a slowdown in demand, we believe that the current cycle is about to turn as a result of both weaker demand and supply dynamics," Goldman Sachs wrote in a note to clients.
European banks have been grappling with frozen funding markets and intense pressure on their balance sheets, prompting state bailouts and other rescue deals for the likes of Dexia and Bradford and Bingley.
Against this financial backdrop, Goldman Sachs recommended exposure to banks which stand to benefit from the fall-out from the crisis and whose premium valuations can be expanded.
The brokerage also recommended banks with distressed valuations, with reduced risk due to government intervention.
Among the major price target changes, Goldman Sachs raised Barclays Plc to 390p from 340p and Credit Agricole to 15.30 euros from 14.40 euros.
The brokerage cut its price target on Deutche Bank to 59 euros from 66 euros and HBOS to 220p from 389.75p.
Friday by 0910 GMT, shares of Credit Suisse were trading up 0.28 per cent at 53.15 Swiss francs, while those of UBS were up 1.6 per cent at 21.64 Sfr.
Shares of Natixis were up 8.5 per cent at 2.55 euros, while BNP Paribas and Societe Generale were both up more than 3 per cent.
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