Goldman Slashed 55% as Nomura Lowers Targets

NEW YORK (TheStreet) -- Goldman Sachs(GS) and Morgan Stanley(MS) were the biggest losers as Nomura analyst Glenn Schorr slashed his estimates for U.S. broker dealers and asset managers, citing "macro concerns" leading to "soft" investment banking revenues, "weak" trading volumes and lower prices for risk assets.

The first quarter "was fun while it lasted, but the bloom is certainly off the rose so far in 2Q12 as capital markets trends have faltered," Schorr writes. He notes that 2012 is shaping up as the third straight year where capital markets start out strong in the first quarter only to shut down for the rest of the year.

Schorr cut his second quarter estimates for Goldman to $1.25 per share from his previous target of $2.78. Wall Street consensus projections, while presumably headed lower, remain at a lofty $2.51 per share for Goldman.

As for Morgan Stanley, Schorr came down to 30 cents per share from a prior 50 cent estimate. The consensus has Morgan Stanley earning 52 cents per share in the second quarter.

Schorr reduced estimates nearly across the board for companies he covers, though in all the other cases he came down by just a few cents at most.

Bank of America(BAC) and BlackRock(BLK) were exceptions, however. Schorr left his second quarter estimate for the giant bank unchanged at 16 cents, while raising his target for BlackRock by two cents to $3.31 per share. Schorr reduced longer-term estimates for those companies, however.

Despite all the cuts, Schorr argues "a healthy dose of pessimism seems to be priced into the stocks," and notes that his top picks are Goldman, Citigroup(C) and JPMorgan Chase(JPM) .

Explaining his preference for Citigroup and JPMorgan over Bank of America, Schorr argues the first two banks are less vulnerable to negative mortgage-related surprises. The flip side, unstated by Schorr, is that signs of a healthier mortgage market appear to have been an important driver of Bank of America's outperformance year to date.

-- Written by Dan Freed in New York.