Goldman Sachs's stock falls after BofA Merrill cuts rating, slashes price target

Shares of Goldman Sachs Group Inc. GS, -2.13% slumped 1.8% in premarket trade Friday, which would shave about 24 points off the Dow Jones Industrial Average’s DJIA, +0.79% price, after Bank of America Merrill Lynch analyst Michael Carrier downgraded the bank/broker, citing lingering uncertainty related to the 1MDB scandal. Carrier cut her rating to neutral, after being at buy for at the last the last three years. He slashed his stock price target cut $225, which is 15.5% above Thursday’s closing price, from $280. Goldman’s stock has tumbled 19% over the past three months, compared with a 2.5% decline in the Dow, with losses accelerating after reports indicated that former Chief Executive Lloyd Blankfein had attended a 2009 meeting with people who have been indicted for conspiring to launder and steal money from sovereign-wealth fund, 1Malasian Development Bhd, or 1MDB. “While we view the current valuation as discounting most of the potential negative scenarios related to 1MDB, we only have limited information and the uncertainty could linger for a while and limit the upside potential if markets stabilize,” Carrier wrote in a note to clients. “If the conclusion is a manageable fine and the outlook for capital markets activity is favorable, we could look to resume our positive stance.”

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