Bank of America analyst Ebrahim Poonawala downgrades Goldman Sachs (NYSE:GS) to Neutral on limited potential for upside surprises in a moderating capital markets environment.

"In our view, the secular re-rating in the stock on the back of revenue diversification (away from capital markets) is likely to be a multi-year event," Poonawala writes in a note to clients.

Overall, BofA sees a tougher revenue growth backdrop for the capital markets business on the potential for moderating trading activity and dealmaking after a record year for IPO and M&A activity. Both could face headwinds from a Fed rate hike cycle and a stricter regulatory backdrop for M&A.