Cowen Gets Buy Calls

08/22/06 - 01:32 PM EDT

Lauren Silva

Boutique investment bank Cowen (COWN Quote - Cramer on COWN - Stock Picks) got a modest boost Tuesday after two Wall Street firms started coverage with buy ratings.

Merrill Lynch research analyst Guy Moszkowski started coverage of Cowen with a buy rating, setting a price target of $18 a share. Sandler O'Neill also initiated coverage with a buy rating on the stock.

Shares of Cowen rose 13 cents to $14.32. The stock has lost 10% of its value since its initial public offering last month. Cowen priced shares at $16 apiece after setting an expected range of $19 to $21 a share.

"Market conditions have driven shares lower from an already low IPO price ... and Cowen is trading at a significant discount to [its] competitors," Moszkowski said in the report. "This has provided an attractive entry point, in our view."

Cowen's shares are trading at a discount to its competitors, according to Moszkowski's estimates. At Tuesday's price, Cowen shares fetch 12 times next year's estimated earnings. Piper Jaffrey(PJC Quote - Cramer on PJC - Stock Picks) trades at 17.8 times earnings, and Thomas Weisel(TWPG Quote - Cramer on TWPG - Stock Picks) is at 12.9 times.

But Cowen makes about 50% of its revenue from investment banking services and the other half mostly from sales and trading. The bank mainly advises deals and assists trading in equities, which doesn't bode well if the stock market slows.

« Previous Page
1 2
Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*
Gold
10 Yr
0.00%
%
%
%
Data delayed 20 min
Sign up for our FREE newsletters now. See All

  • Cramer's Daily Booyah!
  • Before the Bell

Premium Stock Ideas
Access Action Alerts Plus to find out Cramer’s latest picks now!