December 5, 2008 / 4:48 PM / 10 years ago

UPDATE 1-Fox-Pitt cuts Marshall & Ilsley to underperform

Dec 5 (Reuters) - Marshall & Ilsley Corp’s MI.N outsized exposure to residential construction and home equity will continue to pressure its earnings and capital, said a Fox-Pitt Kelton analyst, who downgraded the stock and said a dividend cut by the bank was imminent.

Residential construction is still the largest area of concern and will remain an overhang for some time, Fox-Pitt analyst Andrew Marquardt said in a note to clients.

He estimated that over half of Marshall & Ilsley’s $6.4 billion residential construction exposure lies within the stressed markets of Florida and Arizona.

The analyst, who downgraded the stock to “underperform” from “in line,” said he does not believe the bank can earn its dividend going forward.

The analyst lowered his price target on the stock to $10 from $16 and widened his 2008 loss estimate for the bank to $1.70 a share from a loss of 58 cents a share.

For 2009, Marquardt now expects the company to post a loss of 45 cents a share, down from his prior view of a profit of $1.05 a share.

Shares of the company were down nearly 2 percent at $12.93 in Friday morning trade on the New York Stock Exchange. (Reporting by Amiteshwar Singh in Bangalore; Editing by Aradhana Aravindan, Himani Sarkar)

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