UPDATE 1-RESEARCH ALERT-Morgan Stanley cautious on US banks

lunes 10 de marzo de 2008 17:53 CET

 (Adds details)
 March 10 (Reuters) - Morgan Stanley said it was cautious on
U.S. large-cap banks, including Bank of America (BAC.N: Cotización),
Citigroup (C.N: Cotización) and JPMorgan Chase (JPM.N: Cotización), citing severe
credit deterioration over the next two to three quarters.
 The investment bank cut its 2008 estimates on banks by $8.8
billion to take into account further expected write-downs in
capital markets businesses.
 "Additionally, we are lowering our forecast for capital
market sensitive revenues: investment banking fees, trading and
asset management fees," analyst Betsy Graseck said in a
research note.
 Morgan Stanley estimated an additional $5 billion in
collateralized debt obligation (CDO) write-downs at both
Citigroup and Bank of America, and $145 million at Wachovia
Bank, in the first quarter based on ABX trends.
 The analyst also sees higher losses for some banks' home
equity portfolios due to the severe stress in the housing
 Following is a table listing Morgan Stanley's price target
and estimate changes on 10 U.S. banks.
                                           Price Target 2008
                                Rating      New Old     New
 Old Bank of America (BAC.N: Cotización)             Equalweight $33 $36  
$2.97 $3.75 Citigroup (C.N: Cotización)                     Underweight $20
$22   $2.09 $2.60 JPMorgan Chase (JPM.N: Cotización)             
Overweight  $37 $39   $3.18 $3.40 Key Corp (KEY.N: Cotización)             
   Underweight $17 $18   $1.48 $1.67 PNC Financial Services
(PNC.N: Cotización)      Overweight  $68 $68   $5.25 $5.30 Suntrust Bank
(STI.N: Cotización)               Equalweight $53 $53   $4.08 $4.11
Wachovia Bank WB.N                Underweight $28 $30   $2.84
$3.56 Bank of New York Mellon Corp (BK.N: Cotización) Overweight  $52 $52  
$3.09 $3.13 Northern Trust Corp (NTRS.O: Cotización)        Overweight  $80
$80   $3.80 $4.04 State Street Corp (STT.N: Cotización)          
Overweight  $90 $90   $5.12 $5.17
 (Reporting by Biswarup Gooptu in Bangalore; Editing by Deepak