Merrill analyst cuts major firm ratings

A Merrill Lynch & Co. analyst has cut the ratings for Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Bear Stearns & Co. to “neutral” from “buy,” citing expectations of broad deterioration in customer-risk appetites, according to published reports.
“Seasonally, quarter one is generally the best of the year, and it appears the industry is exiting the first quarter on a downtrend, with pressure on the mortgage market now being exacerbated by deteriorating risk appetites elsewhere – in emerging markets, but also possibly in US corporate high yield and investment grade,” said Guy Moszkowski, the analyst.
Despite the downgrades, he said that he remains “highly optimistic” on long-term growth prospects for the investment banks as a whole.
He singled out Goldman Sachs for being the best positioned, due to its decreased exposure to mortgages and commodities.