Lehman, Goldman, Morgan Stanley Estimates Cut on Economy/Mortgages.

Bank of America Analyst Michael Hecht slashed Q2 estimates for Lehman (LEH), Goldman Sachs (GS), and Morgan Stanley (MS). Hecht cited a deteriorating economy and continued exposure to both residential and commercial mortgages. Reuters:

On top of weaker activity levels across many areas of investment banking this quarter, this quarter ‘basis risk’ or the divergence between cash and derivatives spreads is the issue driving substantive mark-downs for the I-banks versus spread widening,” Banc of America analyst Michael Hecht said in a research note to clients.


  • Goldman target cut from $185 to $176; Q2 EPS estimate from $3.75 to $3.45, Neutral.
  • Lehman’s target drops from $50 to $43. Q2 EPS falls to -$0.50 from $0.76. Neutral.
  • Morgan Stanley target to $57 from $62; Q2 EPS from $1.40 to $0.95. Buy


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