(Recasts, adds details)
Sept 9 (Reuters) - Richard Bove, a prominent U.S. banking analyst, sees a weak 2008 for at least three big U.S. investment banks primarily due to reduced trading activity and poor commission business.
Cutting his 2008 outlook on Lehman, Goldman Sachs and Morgan Stanley for the second time since June, Ladenburg Thalmann’s Bove said, “business in a word has been lousy in the third fiscal quarter. The drivers of profit in the financial sector are weak.”
Mortgages, credit derivatives, private equity, prime brokerage and international all seem less vibrant that they have been, said Bove, who still does not rule out the possibility of a hostile takeover of Lehman Brothers LEH.N.
Bove widened his third-quarter loss estimate for Lehman to $3.17 a share from $2.32. For 2008, he expects Lehman to post a loss of $7.39 per share, compared with his prior view of a loss of $6.33.
On Goldman Sachs (GS.N), Bove cut his 2008 earnings estimate by $1.56 to $12.60 a share, saying though he considered Goldman to the best firm on Wall Street, it would be difficult for the largest U.S. securities firm to escape the problems in its key markets.
Bove also lowered his 2008 earnings view for Morgan Stanley (MS.N) by 6 percent to $4.07 per share, and said while the No. 2 U.S. investment bank does not appear to have the need to write down large investments any longer, its core business is not performing well. (Reporting by Sweta Singh in Bangalore; Editing by Himani Sarkar)