UPDATE 1-Bernstein cuts outlook on U.S. investment banks

miércoles 20 de agosto de 2008 14:35 CEST

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Aug 20 (Reuters) - Lehman Brothers Holdings Inc LEH.N may post a third-quarter loss and incur fresh write-downs of about $3 billion, according to Sanford C. Bernstein & Co analyst Brad Hintz, who also cut his earnings estimates for Goldman Sachs Group Inc (GS.N: Cotización) and Morgan Stanley (MS.N: Cotización).

Weakening credit market conditions in the third quarter indicate that more write-downs and hedging failures will likely impact U.S. investment banks' performance for the period, the analyst said Wednesday.

"We expect the quarter will again be characterized by mark-to-market valuation adjustments in mortgage-backed securities, commercial mortgage-backed securities and collateralized debt obligations holdings, as well as ineffective hedge performance," Hintz wrote in a note to clients.

Fixed income environment "substantially" weakened this quarter, and spreads for many credit market instruments are approaching their March highs, he added.

The analyst forecast a third-quarter loss of $1.40 a share for Lehman. He earlier saw a profit of 74 cents a share for the fourth-largest U.S. investment bank.

Hintz is the latest in a string of Wall Street analysts to forecast a third-quarter loss at Lehman. Since last month, his rivals at Merrill Lynch, Deutsche Bank, Fox-Pitt and J.P. Morgan Securities have forecast a quarterly loss for Lehman.

Bernstein's Hintz also reduced his third-quarter earnings estimates for Goldman to $2.50 a share from $3.35, and for Morgan Stanley, to 81 cents a share from $1.04.

According to Reuters Estimates, analysts expect Lehman to post a third-quarter loss of 95 cents a share, while Goldman is expected to earn $3.05 a share and Morgan Stanley is seen earning 88 cents a share.   Continuación...