November 15, 2007 / 11:50 AM / 12 years ago

UPDATE 1-RESEARCH ALERT-Punk Ziegel's Bove upgrades Lehman

(Adds analyst comments, background details)

Nov 15 (Reuters) - Punk Ziegel analyst Richard Bove upgraded Lehman Brothers Holdings Inc LEH.N to “market perform” from “sell,” saying the No. 4 U.S. investment bank stands out as an “unusually” well managed company and that the bank could make money where others are losing.

Lehman, which had on Wednesday suggested it will not see a meaningful mark down on its securities portfolio, could report a sizable currency adjustment profit due to the dollar depreciation, as the bank’s growth in foreign areas appears to be three times faster than growth domestically, Bove said.

Bove, who upped his target on the stock to $70 from $59, also raised his fiscal 2007 earnings view for Lehman to $7.53 a share from $7.48 and 2008 view to $7.69 a share from $6.69.

Bove, however, said he would not buy the stock until fears of write downs can be safely eliminated, adding that Lehman’s core businesses like mortgages and underwriting are shrinking.

The risk of adjustments in “level 3” assets — illiquid securities valued by firms on their own assets — remains, he added.

On Wednesday, Lehman co-Chief Administrative Officer Ian Lowitt said the company remains “very comfortable” with its valuation of level 3 assets on its book, and that its asset-backed securities business, which is currently in a deep freeze, will come back eventually.

Lehman’s shares rose over 3 percent on Wednesday to close at $65.45 on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy)

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