SunTrust 'Sell' From Meredith Whitney (STI, BRK-A)

SunTrust Banks, Inc. (NYSE: STI) is getting hit this morning, although perhaps not as harshly as the call might sound.  Meredith Whitney put on her banker Scrooge hat and issued a SELL rating on the bank.  She said the bank is at the wrong place at the wrong time.

We would also note that, while Meredith Whitney was far more of an influence than others before, this analyst call is exactly the opposite of Credit Suisse, which raised its SunTrust rating to Outperform from Neutral as the firm believes the Southeastern United States will recover faster.

The worst part is what is expected for the banks earnings.  Whitney sees a loss of -$4.07 EPS in 2009 and a loss of -$2.50 EPS next year.  What is interesting here is that these estimates do not fly in the face of consensus data from Thomson Reuters for 2009, but does deviate from 2010 estimates.  The consensus is -$4.19 EPS for 2009.  The consensus estimate for 2010 is -$1.04 EPS, and the worst estimate is also -$2.50.  Much of this looks to be on reduced credit and continued writedowns in the periods ahead from a lower-credit and crunched consumer.

SunTrust is less of a Buffett holding than it had been if you look through the full Berkshire Hathaway Inc. (NYSE: BRK-A) report where we showed the changes and color on positions.  It is also our take that SunTrust should perhaps even be one of the positions Buffett should sell.

JON C. OGG
DECEMBER 3, 2009