UPDATE 1-RESEARCH ALERT-Friedman cuts Wachovia to underperform

viernes 9 de noviembre de 2007 16:57 CET

 (Adds details, background, share movement)
 Nov 9 (Reuters) - Friedman Billings Ramsey cut Wachovia
Corp WB.N to "underperform" from "market perform," based on
the company's disclosure of rapidly deteriorating residential
mortgage credit metrics and continued write-downs.
 Analyst Gary Townsend also halved his fourth-quarter
earnings estimate to 50 cents a share from $1 a share. He cut
his 2008 profit estimate to $4.08 from $4.60 a share.
 Shares of the fourth-largest U.S. bank touched a new
year-low of $38.05, before pulling back some of the losses to
trade down almost 3 percent at $39.20 in morning trade on the
New York Stock Exchange.
 Wachovia on Friday said it incurred about $1.1 billion of
losses in October on mortgage securities on top of a $1.3
billion write-down during the third quarter.
 Charlotte, North Carolina-based Wachovia joined a growing
list of financial companies -- including Citigroup (C.N: Cotización),
Merrill Lynch & Co Inc MER.N and Morgan Stanley (MS.N: Cotización) --
that have reported losses from worsening conditions in consumer
credit and capital markets.
 FBR's Townsend cut his price target on the stock to $35
from $47, and said Wachovia's mortgage exposure and
deteriorating credit trends will cause the shares to trade at a
discount to peers.
 Shares of Wachovia trade 9.14 times forward earnings,
lagging peers Citigroup, Bank of America (BAC.N: Cotización) and Wells
Fargo (WFC.N: Cotización), which are at a multiple of 13.86, 9.82 and
11.66, respectively.
 (Reporting by Shamik Paul, Nivedita Gupta in Bangalore;
Editing by Pratish Narayanan)