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Nov 15 (Reuters) - Punk Ziegel analyst Richard Bove cut his price target on Bear Stearns Cos Inc BSC.N to $109 from $120 and said his “market perform” rating on the stock reflected the possibility that the fifth-largest U.S. investment bank may still be acquired.
On Wednesday, Bear Stearns said it expects to write down $1.2 billion of assets linked to mortgages in the fourth quarter, soothing investors who had feared multibillion-dollar writeoffs.
However, Bove said this was certainly not a positive development and added that the bank is likely to record a loss in the fourth quarter driven by the expected write down.
Banc of America Securities analyst Michael Hecht cut his fourth quarter estimates on Bear Stearns to a loss of $1.57 a share from a profit of $2.37 a share. He lowered his 2007 earnings view to $6.81 from $10.75 a share.
Given the overall reduction in exposure, Hecht said he viewed negative marks post fourth quarter being less likely for Bear, allowing the firm to start 2008 with a “clean slate”.
Hecht maintained his “neutral” rating and $126 price target on the company.
Sanford C. Bernstein on Wednesday cut its price target on Bear to $140 from $150 to reflect its lowered earnings-per-share estimates for the “Big Five” brokerage group, which is comprised of Bear Stearns, Goldman Sachs (GS.N), Lehman Brothers LEH.N, Merrill Lynch MER.N and Morgan Stanley (MS.N).
Bear Stearns shares have fallen 35 percent this year, compared with a 10 percent decline for the sector as measured by the Amex Securities Broker-Dealer Index .XBD. Shares of Bear closed at $103.27 Wednesday on the New York Stock Exchange. (Reporting by Nivedita Gupta in Bangalore; Editing by Bernard Orr)