Beleaguered banking giant Goldman Sachs has lost much of the edge it had over competitors due to the recent government charges and is a stock investors should avoid, analyst Meredith Whitney told CNBC.
After a year of outpacing its rivals, Goldman faces a future in which its brand has been tainted and it will lose business to small competitors, said Whitney, who doesn't have a "buy" rating on Goldman or any of the other big banks.
Financials are up 16 percent in 2010 but have taken a beating in the last 10 days since the Goldman charges exploded onto the market.
"They're going to lose market share and small players will gain market share," said Whitney, CEO of Meredith Whitney Advisory Group. "The momentum has clearly been taken away from Goldman."
The company's stock should trade around book value, Whitney added, which would place the price just above $120. Goldman's stock currently trades at 1.26 times book value, according to Thomson Reuters.
Goldman finds itself facing charges that it withheld information from investors regarding a package of securities that were backed by subprime mortgages. The government alleges that Goldman didn't tell investor that an investor who believed the mortgages would fail helped suggest securities for the collateralized debt obligation.
Even if Goldman is exonerated of the charges, the damage has been done, Whitney said.
"It gives a lot of hobbled governments ammunition to go after what is the only scapegoat right now," she said. "Whether they're proven guilt or not, now they're being forced to play defensive."
On other issues, Whitney called proposed new financial reform regulations "squishy" but said the result will be banks shrinking their balance sheets and consumers forced to seek predatory lenders for credit.
She also renewed her prediction that the housing market would see a double dip as more inventory is forced back onto the market.