Another Analyst Hammers Investment Banking Stocks (LEH)(GS)(MS)

Banking, finance, and taxes

Published: May 19, 2008 10:43 am

As each day passes, a larger and larger portion of the analyst community turns on banks and brokerages like a pack of wild dogs.

The majority report now seems to be that most large financial companies still have several quarters of write-offs, weak earnings, asset sales, restructuring, down-sizing, and ,in some cases, outright failures.

In a fit of irony, Citigroup downgraded Lehman (LEH), Goldman Sachs (GS), and Morgan Stanley (MS) saying "The second quarter has seen lower client-related trading volumes, little banking activity, losses related to ineffective hedging and reversals of gains on fair valuing liabilities." in a note published by Reuters.

If the analysis is right, these stocks and those of other brokerages are still sharply overvalued. Lehman now trades at $44, about twice it 52-week high. If it is likely to have another two or three quarters of extremely rough earnings, it may be heading back to the $20 to $30. Morgan Stanley has moved from just under $34 to $47.42. A wave of bad news there could push it back below $35.

The brokerage business may just be entering the woods.

Douglas A. McIntyre

Take Charge of Your Retirement In Just A Few Minutes (Sponsor)

Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance—and SmartAsset’s simple quiz makes it easier than ever for you to connect with a vetted financial advisor.

Here’s how it works:

Answer a Few Simple Questions. Tell us a bit about your goals and preferences—it only takes a few minutes!
Get Matched with Vetted Advisors Our smart tool matches you with up to three pre-screened, vetted advisors who serve your area and are held to a fiduciary standard to act in your best interests. Click here to begin
Choose Your Fit Review their profiles, schedule an introductory call (or meet in person), and select the advisor who feel is right for you.

Why wait? Start building the retirement you’ve always dreamed of. Click here to get started today!