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July 7 (Reuters) - Several Wall Street brokers reversed their 2008 forecast on Wisconsin's largest bank Marshall & Ilsley Corp MI.N to a loss, after the company said it expects a huge second-quarter loss due to increased provision for bad loans.
J.P. Morgan & Securities and Morgan Keegan downgraded the stock and said there was a possibility of a dividend cut by the bank. Shares of the company fell as much as 12 percent to a new 52-week low in morning trade.
On July 3, Marshall & Ilsley had said it would keep aside as much as $900 million for covering bad loans and would write off up to $415 million of loans and leases in the second quarter.
The write-offs were generated from deteriorating housing markets in the states of Arizona and Florida -- two of the worst hit states by the tumbling property prices.
JP Morgan downgraded the stock to "underweight" from "neutral" and Morgan Keegan cut it to "market perform" from "outperform."
"Not only has the credit picture meaningfully deteriorated from the prior quarter, it appears that the problems are running deeper than at peer banks," JP Morgan said.
Ladenburg Thalmann's analyst Richard Bove expects Marshall & Ilsley to post a loss of 6 cents a share for 2008, down from his prior estimate of profit of $1.77 a share.
The problems the bank faces extend to other parts of its business and will lower its secular growth rate, Bove said in a note to clients.
JP Morgan and Morgan Keegan expect the bank to post a loss of 95 cents a share and 65 cents a share, respectively, down from their earlier estimates of profit of $1.95 and $1.90.
Sanford C. Bernstein also cut its 2008 estimate to a loss of 40 cents a share from an earlier profit view of $1.73 a share and lowered its price target on the stock by $2 to $25.
Analysts on an average were expecting the company to earn $1.58 a share, excluding special items, for 2008, according to Reuters Estimates.
Marshall & Ilsley shares were down 7 percent at $13.15 in morning trade on the New York Stock Exchange. They touched a 52-week low of $12.35 earlier in the session. (Reporting by Vidya L Nathan, Sweta Singh in Bangalore; Editing by Himani Sarkar)