Goldman Sachs Downgraded by Investment Bank Oppenheimer

Everyone gets a taste of their own medicine at some point. Even Goldman Sachs.

The prestigious Wall Street investment bank was downgraded Wednesday, along with Jefferies and private equity giant Carlyle, by competitor Oppenheimer. Analysts said they now expect US investment banking revenue to be flat this year, instead of jumping 32% as predicted previously, with an expected increase in dealmaking yet to materialize.

Deals or No Deals

Virtually every firm in the forecasting business — from Goldman to BCG to Morgan Stanley to McKinsey to Deloitte — took a look at their crystal balls at the start of this year and saw pent-up demand from two straight moribund years for mergers and acquisitions being unleashed in 2025.

It was a perfectly reasonable view, given that the new US presidential administration was expected to pursue a lighter regulatory touch, clearing the way for deal activity to thrive. M&A levels, Oppenheimer noted, had fallen “roughly on par with those a decade earlier.” But the policy priority in Washington has turned out to be tariffs, and with deregulation on the back burner for now, Oppenheimer said it has reconsidered its own “very optimistic” hopes for “a major rebound in M&A activity, and its attendant financing activity.” And thus, with the M&A rebound “delayed or cancelled,” came the downgrades to Goldman, Carlyle, and Jeffries, all of which thrive when Wall Street dealmaking is at its busiest:

• Writing that there is “no visible sign of this M&A rebound,” Oppenheimer’s analysts noted deal volume is only 2.4% higher than it was last year. In addition, equity capital markets volume — which accounts for initial public offerings (IPOs) and other sales of shares — has risen a tepid 2.7%.
• There’s a simple buy case for Goldman, however: Its shares are down 16.5% from a February high. In other words, the delay in M&A activity could already be priced in. That’s something Steven Weiss, a managing partner at Short Hills Capital Partners narrowed in on during an appearance on CNBC, stating: “I can only imagine that that analyst either started this week or was on vacation last month: There’s nothing in there that’s new and the time to downgrade [Goldman] was obviously a while ago.”

“At this point, we’re not talking about the M&A market going away, we’re not talking about the IPO market going away, we’re talking about waiting for it to emerge,” Weiss added, noting many forecasts predicted the deal rebound would occur in the second half of 2025.

A Little Patience, Please: Morgan Stanley analysts made a similar case last week. While noting a “whiplash of tariff talks is significantly raising uncertainty for CEOs, boards, and sponsors looking to plan, negotiate, and launch deals,” the bank’s analysts expect this environment to stabilize and the US administration to roll back antitrust enforcement as promised. They added that private equity firms are sitting on $4 trillion in capital and, in a separate note, pointed to BlackRock’s $23 billion Panama Canal port deal earlier this month as a sign that big deals are still possible. Meanwhile, there will likely be more insight as early as next week, when Jefferies is scheduled to report earnings.