UPDATE 2-RESEARCH ALERT-BofA cuts Q1 earnings view for brokers

viernes 4 de abril de 2008 11:44 CEST

 (Adds details)
 April 4 (Reuters) - Merrill Lynch & Co Inc MER.N will
likely post a loss in the first quarter, said a Banc of America
Securities analyst, who also cut his earnings forecast on
several U.S. brokers on expectations of higher mark-downs on
fixed income inventories.
 The December fiscal year-ended firms are also likely to see
weaker debt underwriting across most credit areas, similar to
what was reported by the November fiscal year-ended firms like
Lehman Brothers Holdings Inc LEH.N, Goldman Sachs Group Inc
(GS.N: Cotización) and Morgan Stanley (MS.N: Cotización), analyst Michael Hecht wrote
in a research note to clients, previewing first-quarter
 "While many of the firms with a November FYE saw a
relatively robust set of results excluding markdowns in various
sales and trading areas, an issue the December FYE firms will
have to contend with is that market conditions in March were
less favorable than December across equities and fixed income
markets," Hecht said.
 The analyst cut his price target and earnings estimates for
the first quarter and 2008 on Jefferies Group Inc JEF.N,
Lazard Ltd (LAZ.N: Cotización), Evercore Partners Inc (EVR.N: Cotización) and Greenhill
& Co Inc (GHL.N: Cotización).
 For Merrill, he expects first-quarter gross writedowns of
$7.5 billion, up from his prior view of $3.5 billion. Net
writedowns for Merrill is expected to be $5.8 billion, he said.
 Most areas of investment banking continued to slow, Hecht
 In the first quarter, merger and acquisition fees globally
fell 47 percent quarter-on-quarter and 30 percent year-on-year,
the analyst said.
 Equity underwriting fees were down 55 percent
quarter-on-quarter and 32 percent year-on-year, and debt
underwriting fees were down 11 percent quarter-on-quarter and
52 percent year-on-year, Hecht noted.
 He, however, expects results in cash equities to be strong
but down sequentially and on a year-on-year basis. Hecht also
expects to see growth in areas like equity derivatives, prime
brokerage, interest rate derivatives and forex.
 In his 12-month thesis on the sector, Hecht said he was
"neutral" on the large investment banks, but preferred asset
managers, given positive operating leverage to above-average
organic growth and higher trending equity markets.
 The following table lists the price target and estimate
changes on certain brokers by the brokerage:
                         New  Old      April 3      New  
Old    New    Old
 Merrill Lynch MER.N      $56  $65      $45.89      -$2.25
$0.01  $1.00  $4.10
 Lazard Ltd (LAZ.N: Cotización)         $59  $63      $38.11       $0.50
$0.77  $3.25  $3.45
 Jefferies JEF.N          $22  $26      $17.12       $0.12
$0.29  $0.84  $1.46
 Greenhill (GHL.N: Cotización)          $80  $85      $72          $0.75
$1.13  $4.14  $4.46
 Evercore Partners (EVR.N: Cotización)  $22  $25      $19.01       $0.20
$0.37  $1.15  $1.41
  (Reporting by Tenzin Pema in Bangalore; Editing by Bernard