Analysts Are Downgrading These 5 Stocks

03. The Goldman Sachs Group, Inc. (NYSE:GS)

Number of Hedge Fund Holders: 69

On July 10, Societe Generale analyst Andrew Lim downgraded The Goldman Sachs Group, Inc. (NYSE:GS) from a Buy rating to a Hold rating. The downgrade comes ahead of the anticipated publication of the Basel 4 rules in the upcoming weeks. These rules have the potential to impose substantially higher capital requirements on banks, which has led to the downgrade decision by Societe Generale. All 23 banks successfully met the minimum capital requirements in the Federal Reserve’s 2023 stress tests. This accomplishment can be attributed to increased net interest income compared to the previous year. However, analyst Andrew Lim expressed concerns about upcoming B4 regulations that aim to enforce stronger capital requirements for large banks in response to recent bank failures. Lim’s analysis suggests that these regulations, which include operational risk and inflation in risk-weighted assets, may outweigh any potential reductions in credit risk-weighted assets. Specifically, Citigroup Inc. (NYSE:C) and The Goldman Sachs Group, Inc. (NYSE:GS) could face more significant challenges in meeting the heightened capital requirements compared to their peers.