UPDATE 1-Punk Ziegel cuts '08 EPS view on Merrill, 4 other banks

lunes 21 de enero de 2008 12:42 CET

 (Adds analyst's comments and background)
 Jan 21 (Reuters) - Punk Ziegel analyst Richard Bove cut his
2008 earnings forecast on five U.S. banks, including Merrill
Lynch & Co Inc MER.N, even as he narrowed his 2008 loss view
on Washington Mutual Inc (WM.N: Cotización) and upgraded U.S. Bancorp
(USB.N: Cotización) to "buy" from "market perform" on valuation.
 Bove, who rates Merrill Lynch a "sell," said he cut his
2008 earnings view on the world's largest brokerage to $4.57 a
share from $6.35 a share, and added that while it was possible
to believe that the firm's balance sheet had been properly
adjusted, it was harder "to plot" a very positive earnings
 The analyst noted that Merrill's holdings in financial
instruments that were being questioned by the market, although
much reduced, were still sizable at the end of 2007.
 "The nature of these holdings suggests that there could be
further write-downs if two conditions exist, either the economy
turns weaker causing more defaults or buyers continue their
unwillingness to own these securities irrespective of economic
conditions," Bove wrote in a note to clients.
 Merrill Lynch, once the largest underwriter of
collateralized debt obligations (CDOs) in the United States,
had on Thursday reported around $16 billion in mortgage-related
write-downs and adjustments in the worst quarter in its
 Financial stocks in the U.S. and Europe have been hit badly
by the surge in U.S. subprime defaults that began last summer,
and many have revealed huge write-downs or sold shares to
foreign investors to raise capital.
 Bove kept his "buy" recommendation on Wells Fargo and Co
(WFC.N: Cotización), Northern Trust Corp (NTRS.O: Cotización) and State Street Corp
(STT.N: Cotización).
 He continued to rate Washington Mutual with "market
perform," but cut his price target on the stock to $15 from
 The analyst raised his target on US Bancorp to $40 from
 The following table has the estimate changes made by the
analyst on the U.S. banks:
 COMPANY         RIC                EPS VIEW             RATING
                           2008              2009
                       Current  Prior    Current Prior     
 Merrill Lynch  MER.N   $4.57    $6.35    $5.01   $6.81  
Sell      $51
 U.S. Bancorp   (USB.N: Cotización)   $2.56    $2.79    $2.84   $3.06   Buy
 Northern Trust (NTRS.O: Cotización)  $3.94    $3.95    $4.26   $4.35   Buy
 Wells Fargo    (WFC.N: Cotización)   $2.53    $2.86    $2.87   $3.11   Buy
 State Street   (STT.N: Cotización)   $5.18    $5.52    $5.67   $5.86   Buy
 Washington     (WM.N: Cotización)   -$0.61   -$0.69    $0.78   $0.83  
Market    $15
 (Reporting by Tenzin Pema in Bangalore; Editing by Anil