Bove Upgrades Lehman (LEH) To Buy, Citing Takeover Possibility

Ladenburg Thalmann analyst Dick Bove upgraded Lehman Brothers (LEH) from Neutral to Buy today on the theory that the embattled bank could be the target of a takeover bid. Bove:

The market is at a stand-off. Investors are unwilling to accept any positive view of the company; management is unwilling to sell out at a deeply distressed value. The stage is set for a hostile bid to take over the whole company.

Bove lowered his price target to $20 from $23, which is still well above the $13.23 Lehman shares were trading for this afternoon.

Lehman still remains exposed to about $40 billion in commercial real-estate loans, $21.5 billion in Alt-A mortgages, and $24 billion in other residential mortgages. Bove continues:

A deep pocket buyer would not be under any pressure to sell any assets. It could sell Neuberger for more than the value of the whole company and basically own Lehman Brothers for nothing. Will it happen? I do not know. Should it happen? Absolutely, opportunities like this are rarely evident in the markets.

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