Opinions from various analysts on TuesdayJP MORGAN CUTS ESTIMATES FOR BROKERS
JP Morgan analyst Kenneth Worthington says he's reducing estimates on Morgan Stanley (MS), Goldman Sachs (GS), Lehman Brothers (LEH) and Merrill Lynch (MER). He expects write-downs of fixed income inventory and a slowdown in M&A and origination activity to hurt results for all the brokers.
Worthington notes continued write-downs should be positive for the stocks in the short term, alleviating investor fears of the worst and creating the perception of a lower earnings base. However, he adds that large write-downs reflect failed risk management and business strategies, and should hurt valuation longer term.
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