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An Odeon Capital analyst downgraded shares of Citigroup (NYSE:C) to Hold from Buy, Goldman Sachs (NYSE:GS) to Sell from Hold, and Morgan Stanley (NYSE:MS) to Sell from Hold in a note to investors Tuesday.
In the note, the analyst states that “the investment banking industry is under severe stress,” and firms “need to make some tough decisions.”
“These companies are facing severe problems as business dries up. Moreover, moves by the Federal Reserve to shrink its balance sheet suggests that the current tough times will extend through 2023,” the analyst wrote.
He added that recent press reports indicating Goldman Sachs and its industry peers are calling employees back to company headquarters are due to business for the industry being under terrible stress.
The analyst said for the firms, it is “time to reach out to the client base and get business.”
“Using the Bloomberg data, we constructed three tables comparing the months of July and August this year with the same months a year ago,” said the analyst, who said what it reveals is that the “business is in real trouble.”
“Other than investment grade bonds, every significant category is down. Moreover, the businesses with the highest profit margins are down the most,” he concluded.
