Goldman Sachs Faces Drag From Weak Economy, More Regulation, Analysts Say

Goldman Sachs Group Inc. is facing a tough operating environment that could affect earnings, according to two analysts who released notes to investors today.

Sandler O’Neill & Partners analysts led by Jeff Harte said Goldman Sachs Chief Financial Officer David Viniar told them in a recent meeting that market participants are in a state of paralysis because of fear and uncertainty regarding economic challenges in Europe and regulatory changes.

Richard Bove at Rochdale Securities cut his estimates for Goldman’s earnings and stock price because of the debt crisis in Europe and because “the current business environment is weak,” according to a note he sent investors. Bove cut his estimate for Goldman Sachs’s 2010 earnings to $17.17 a share from an earlier estimate of $18.72 and slashed his share price target to $182 from $200.

Goldman Sachs, the bank facing a fraud lawsuit from the U.S. Securities and Exchange Commission, reported record earnings in 2009 and its second-best quarter ever in the first three months of the year. The stock is down $1.09 to $142.95 at 3 p.m. in New York Stock Exchange composite trading today and has dropped 15 percent so far this year.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

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