December 14, 2007 / 9:15 AM / 12 years ago

UPDATE 1-RESEARCH ALERT-Analysts cut Lehman earnings estimates

(Adds details, analysts’ comments, background)

Dec 14 (Reuters) - At least three brokerages, including Citigroup and Banc of America Securities, lowered their earnings estimates on Lehman Brothers Holdings Inc LEH.N after the company said its fourth-quarter earnings fell as the credit market crisis triggered write-downs.

Banc of America analyst Michael Hecht cut his price target on Lehman to $65 from $68, and lowered his fiscal 2008 earnings view to $6.75 a share from $7.09.

Hecht, who kept his “neutral” rating on the stock, said he continued to see fixed-income as an area of concern going into the New Year with potential markdown issues “bleeding” into 2008.

Lehman remains the most fixed-income sensitive firm and slowing fixed-income sales and trading for the industry over the course of 2007 will make it difficult for the bank to show revenue and earnings improvement, Hecht said.

CIBC analyst Meredith Whitney reduced her earnings estimates on the bank for the first three quarters, but raised her estimate for the fourth quarter.

“We expect a continued rough credit market environment in the near term. The limited visibility on future earnings causes us to take a modest growth outlook for next year,” she said in a note to clients.

She maintained her “sector outperformer” rating and $79 price target on the stock.

Citigroup analyst Prashant Bhatia reiterated his “hold” rating on the stock, but lowered his 2008 and 2009 earnings-per-share estimates to $7 and $7.25 from $7.30 and $7.50, respectively.

The brokerage has a price target of $65 on the stock.

Although Lehman has a hefty $79 billion of mortgage exposure, significantly higher than most peers’, the firm continues to outperform most of these peers in terms of limiting losses, Bhatia said in a note.

Lehman’s write-downs are much lower than many Wall Street competitors like Merrill Lynch MER.N, which recorded $8.4 billion of write-downs in the third quarter.

Lehman’s shares have fallen about 20 percent this year, underperforming the Amex Securities Broker Dealer index, .XBD which has fallen about 13 percent, but outperforming competitors including Merrill Lynch.

Shares of the company closed at $61.37 Thursday on the New York Stock Exchange. (Reporting by Nivedita Gupta in Bangalore; Editing by Vinu Pilakkott)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below