Analyst cuts estimates of Goldman, Lehman, Morgan

Worthington joined multiple other analysts that have slashed forecasts in the past week on Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Morgan Stanley ahead of the trio wrapping up their fiscal second quarters May 31.

Like other analysts, Worthington said hedging strategies were not as effective during the most recent quarter for investment banks. Client activity has slowed and the banks face continued write-downs of leveraged loans and fixed income investments, Worthington said in a research note.

Worthington now estimates Goldman Sachs will earn $3.55 per share during the second quarter. He previously estimated the bank would earn $3.68 per share.

Worthington cut his estimate for Lehman to 18 cents per share from 64 cents per share, while he cut his estimate for Morgan Stanley to $1 per share from $1.13 per share.

Shares of investment banks were down Wednesday afternoon as broader markets declined.

Goldman Sachs shares fell 25 cents to $173.67.

Lehman Brothers shares fell $1.40, or 3.8 percent, to $35.80.

Shares of Morgan Stanley fell 35 cents to $41.88.