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BofA Downgrades Bear Stearns

The move comes on the eve of third-quarter earnings.
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Banc of America Securities cut

Bear Stearns


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


, 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.