BofA Downgrades Bear Stearns
Banc of America Securities cut
Bear Stearns
(BSC)
to neutral from buy, becoming the latest firm to cut expectations on Wall Street heading into what's expected to be a bruising third-quarter earnings season.
BofA cut its price target on Bear to $126 from $163, saying the stock looks like "dead money" in the next year or so. The firm cited Bear's heavy exposure to fixed-income markets, which BofA said account for 44% of revenue at Bear.
The news comes as Bear and other brokers have been hit hard by the collapse of the market for mortgage-backed securities and the end of the leveraged buyout boom, which has left many big banks sitting on billions of dollars in so-called hung bridge loans. Both Bear and
Lehman Brothers
(LEH)
, which also focuses heavily on the bond business, have seen their shares lose almost a third of their value amid rising worries about risks taken on during the recent LBO boom.
The big Wall Street firms are due to begin reporting third-quarter earnings next week.
Shares fell $1.28 to $106.39.