Brokerage firm Oppenheimer downgraded several leading US investment banks including Goldman Sachs and Morgan Stanley on Tuesday. The firm cited limited upside potential from current valuations despite supportive business conditions. It advised investors to sell large-cap investment bank shares and instead purchase alternative asset managers, a sector that has faced a sharp selloff. Shares of Morgan Stanley declined 1.4 percent and Goldman Sachs fell about 1 percent in early trading after the ratings were cut to underperform. Oppenheimer also lowered Citigroup and Bank of America to perform from outperform, with their shares dropping roughly 1.3 percent each. The brokerage noted that while no immediate factors threaten the banks growth path, they appear to be in the later stages of an expansion cycle. It suggested shifting focus to commercial banks such as US Bancorp and PNC Financial Services, which remain in earlier phases of growth. Among alternative asset managers, the firm highlighted Ares Management, Blackstone and KKR as preferred holdings.
