Investing.com -- Oppenheimer has downgraded several bank stocks, including Cohen&Company, Goldman Sachs, and Jefferies, to Perform in a note Wednesday due to concerns about a delayed or canceled rebound in merger and acquisition (M&A) activity.

The firm had initially anticipated a strong recovery in M&A activity this year, citing several factors such as pent-up demand, stable-to-lower interest rates, tighter credit spreads, and robust public market stock valuations. 

However, “thus far no visible sign of this M&A rebound” has materialized, with announced M&A activity up just 2.4% year-to-date and equity capital markets (ECM) only increasing by 2.7%, according to the firm.

Oppenheimer analysts point to external uncertainties, including concerns over tariffs and the “fiscal detox” resulting from trade and security upheaval, as key reasons for the subdued market conditions. 

This uncertainty is expected to stall M&A activity, prompting the firm to revise its revenue projections for several major banks. 

For Goldman Sachs and Jefferies, Oppenheimer has reduced its 2025 estimates, reflecting more conservative expectations for investment banking revenue growth. 

“We are trimming our estimates for GS and JEF to reflect this quarter's muted Dealogic revenue estimates,” analysts noted. 

As a result, their 2025 and 2026 revenue forecasts have been cut by 12.5% and 6.9% for Goldman Sachs and 20.7% and 10.5% for Jefferies.

Oppenheimer also downgraded Cohen&Company, citing the firm’s reliance on returning significant capital to limited partners to fund the next generation of private equity funds. 

Despite matured investments, “this will likely be more challenging than we previously expected,” says the firm.

In light of these changes, Oppenheimer is adopting a more cautious stance, focusing on secular growth stories and “coupon clipping” commercial banks such as Bank of America, Citigroup (NYSE:C) and U.S. Bancorp (BVMF:USBC34).

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