June 12 (Reuters) - Banc of America Securities cut its price target on Lehman Brothers LEH.N to $23 from $37, saying it expects fixed income sales and trading, which accounted for more than half of its revenue in 2007, to slow down over the next few quarters.
Lehman is the most leveraged large investment bank in the fixed income market, and a more challenging fixed income market with higher long-term interest rates, lower volatility and wider credit spreads could hurt the company the most, the brokerage said.
It will be difficult for Lehman to show revenue and earnings-per-share improvement for the next few quarters, the brokerage added.
Banc of America, which kept its “neutral” rating on Lehman, expects the stock to languish due to its still-sizable troubled asset exposures and the need to de-leverage.
However, the brokerage said it does not see Lehman “going the way” of Bear Stearns due to the available liquidity and absence of a sizable prime brokerage business that Bear Stearns had.
Shares of Lehman closed at $23.75 Wednesday on the New York Stock Exchange. (Reporting by Supantha Mukherjee in Bangalore; Editing by Deepak Kannan)