UPDATE 1-RESEARCH ALERT-M. Stanley cuts Wachovia, Wells Fargo

viernes 1 de febrero de 2008 13:56 CET

 (Adds details, changes source, analyst's comments, background)
 Feb 1 (Reuters) - Morgan Stanley downgraded Wachovia WB.N
and Wells Fargo (WFC.N: Cotización) to "underweight" from "equal-weight,"
saying it was concerned about the increasing deterioration rate
in housing values and the relatively large exposure that the
two stocks have to housing assets.
 "We are underweight large cap banks and expect higher loan
losses and reserve hikes to drive down EPS through 2009,"
analyst Betsy Graseck wrote in a note to clients.
 Graseck revised her earnings estimates for several large
cap banks in the sector including Citigroup (C.N: Cotización), Bank of
America (BAC.N: Cotización) and JPMorgan Chase (JPM.N: Cotización) on the back of
fourth-quarter earnings.
Nearly all large U.S. banks reported lower fourth-quarter
results last month hurt by the credit, mortgage and real estate
markets turmoil.
 Profit fell 34 percent at JPMorgan, 38 percent at Wells
Fargo, 95 percent at BofA and 98 percent at Wachovia.
Citigroup, suffered a record $9.83 billion loss, while
Washington Mutual (WM.N: Cotización), the largest savings and loan, lost
$1.87 billion.
 Graseck reduced her underweight position in Citigroup to 3
percent from 5 percent, saying the risk to the stock had
declined, given its actions to improve capital and
profitability. "Large risks such as CDOs and subprime keep us
Underweight C (Citigroup)," she said.
 Following are Morgan Stanley's price target and estimate
changes on 15 U.S. banks:
 Name                          Price Target        2008 EPS
                           New      Old        New     Old
 Bank of America Corp (BAC.N: Cotización)  $36      $41        $3.75 
 Citigroup Inc (C.N: Cotización)           $22      $27        $2.60 
 JPMorgan Chase & Co (JPM.N: Cotización)   $41      $48        $3.75 
 BB&T Corp (BBT.N: Cotización)             $28      $32        $2.80 
 Fifth Third Bancorp (FITB.O: Cotización)  $21      $25        $1.85 
 KeyCorp (KEY.N: Cotización)               $18      $22        $1.67 
 National City Corp NCC.N    $10      $13        $1.01 
 PNC Financial Services        $68      $75        $5.34 
 Group Inc (PNC.N: Cotización)
 SunTrust Banks Inc (STI.N: Cotización)    $53      $61        $4.11 
 US Bancorp (USB.N: Cotización)            $27      $30        $2.41 
 Wachovia Corp WB.N          $30      $39        $3.54 
 Wells Fargo & Co (WFC.N: Cotización)      $24      $30        $2.00 
 Bank of New York Mellon       $52      $52        $3.13 
 Corp (BK.N: Cotización)
 Northern Trust Corp (NTRS.O: Cotización)  $80      $80        $4.04 
 State Street Corp (STT.N: Cotización)     $90      $90        $5.17 
 (Reporting by Nivedita Gupta in Bangalore; Editing by Amitha