Brokers Slumping Again
08/10/07 - 10:02 AM EDT
Laurie Kulikowski
On Friday, Keefe, Bruyette & Woods analyst Diane Merdian cut her estimates on Citi and JPMorgan Chase to reflect a tougher environment in the second half of the year.
Merdian says Citi and JPMorgan Chase are likely to have lower revenue out of their securities and investment banking business due to "lower activity and marks-to-market on held-for-sale loans and trading inventory." She also expects higher provisions for future losses. "We expect a weak third quarter, should it come to pass, might hurt Citi's stock disproportionately since investors, in our opinion, may have waited so patiently to see real progress in core earnings only to be thwarted by poor market conditions," she writes in a note. But Merdian writes the "pain will be quite manageable" for JPMorgan Chase.
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