The downgrade comes as the firm believes it will take management longer than expected to reach its profit targets.
Sterne Agee has set a $37 price target on CIT Group stock.
"We are reducing our rating to reflect the longer-than-expected period outlined by management to achieve targeted level of profitability, the higher cost associated with the sale/spin of the air leasing business in 2016, and, while significantly above current levels, a targeted level of ROATCE that translate into below-peer level of ROE," the firm said in a note.
CIT Group is a bank holding company that provides financing, leasing, and advisory services principally to middle market companies.
CIT Group stock closed up by 0.69% to $33.46 on Thursday.
Separately, TheStreet Ratings has set a "hold" rating and a score of C on CIT Group stock. The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, TheStreet ratings also finds weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: CIT