Citing Real Estate Exposure, Goldman Cuts Prudential, MetLife Ratings

Citing their significant exposure to residential and commercial real estate, Goldman Sachs cut its rating for Prudential Financial to "sell," and its rating for MetLife Insurance to "neutral," according to Reuters:

Goldman Sachs, in a research note, cut its rating on Prudential Financial (PRU.N: Quote, Profile, Research, Stock Buzz) to "sell" and reduced its 12-month price target on the stock to $40 a share from $58.

Analyst Tom Cholnoky said Prudential’s significant exposure to residential and commercial mortgage-backed securities and commercial real estate loans could trigger between $1 billion and $4 billion in impairments — an amount that could wipe out the insurer’s $1 billion in excess capital.

Prudential shares fell 8.26 percent to $38.33 in late morning trading.

Goldman cut MetLife (MET.N: Quote, Profile, Research, Stock Buzz) to "neutral" from "buy" and reduced its 12-month target on the stock to $38 a share from $42.

Cholnoky noted that MetLife had raised $2.3 billion in capital, it could still see between $1 billion and $6 billion in losses on assets, denting its $7 billion in excess capital.

MetLife shares fell 2.28 percent to $30.43 in late morning trading on the New York Stock Exchange.