UPDATE 2-Lehman faces Q3 loss, fresh writedowns: Morgan Stanley
(Recasts; adds analyst comments on Lehman, background)
By Tenzin Pema
BANGALORE Aug 27 (Reuters) - Lehman Brothers Holdings Inc LEH.N may post a loss in the third quarter on likely pre-tax writedowns of $3.5 billion, while Goldman Sachs Group Inc (GS.N: Cotización) may incur $1.5 billion in writedowns, according to an analyst at Morgan Stanley.
Analyst Patrick Pinschmidt also cut his third-quarter earnings outlook for Goldman to reflect broad-based market weakness, but expects the market to look past a disappointing quarter for the company if it found no evidence of a material breakdown in risk management.
Shares of Goldman, the largest U.S. securities firm, were down about 1 percent at $155.02 in afternoon trade on the New York Stock Exchange, while those of Lehman were up more than 8 percent at $15.22.
"While Goldman Sachs is less exposed to mortgage writedowns, industry-wide decline in flow business coupled with vulnerability to equity market directionality stemming from principal investment activities has exacerbated exceedingly difficult market backdrop," Pinschmidt said.
He cut his third-quarter earnings outlook on Goldman to $1.65 a share from $3, and forecast a third-quarter loss of $2.80 a share for Lehman. He earlier saw a profit of 8 cents a share for Lehman.
According to Reuters Estimates, analysts expect Goldman to earn $2.62 a share, while Lehman is seen posting a loss of $1.89 a share for the third quarter.
Wall Street research analysts have been projecting yet another tough quarter for U.S. investment banks marked by additional writedowns across a series of fixed-income assets amid an already weak operating environment. Continuación...