Lehman Overcomes Analyst-Driven Selloff

The firm rose with the market after crude oil fell, after analysts at Goldman Sachs and Sanford Bernstein painted bearish pictures for the third quarter.
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Lehman Brothers

(LEH)

shares rebounded Wednesday alongside other financials from an early selloff that was spurred by a spate of downgrades.

Lehman earlier had approached multiyear lows on Wednesday after analysts from Goldman Sachs and Sanford Bernstein offered bearish outlooks and a report in the

New York Post

that Lehman's talks with a Korean investor over a large equity infusion fell through. A decline in crude oil prices buoyed the market and flipped many losers into positive territory.

According to widespread reports published over the past two weeks, Lehman is

shopping all or parts of its asset management business

, and up to $40 billion worth of real estate.

"As a matter of firm policy, we don't comment on rumors or speculation," a Lehman spokesman wrote in response to an email inquiry.

After the market closed Tuesday, Goldman Sachs lowered its estimates on all major U.S. investment banks, including Lehman. "We expect

third-quarter results will be hampered by declining global equity markets, further deterioration in mortgage assets, and slower levels of corporate and institutional activity. We assume no or negative earnings for the majority of firms in our universe this quarter," wrote analyst William Tanona.

In addition to Lehman, Tanona cut estimates on

Morgan Stanley

(MS) - Get Report

,

Citigroup

(C) - Get Report

JPMorgan

(JPM) - Get Report

and

Merrill Lynch

(JPM) - Get Report

.

Of Lehman, Tanona wrote: "We anticipate the firm will reduce its overall mortgage exposure by 20%, suggesting about a $15 billion reduction. As a result, we assume the firm will have one of the more significant net marks this quarter and we estimate it to be in the $2.5

billion to $3.5 billion range."

In addition to Lehman and Morgan Stanley, Bernstein lowered estimates on

Goldman Sachs

(GS) - Get Report

. All three investment banks are expected to report third-quarter numbers in mid-September.

Lehman shares, which dipped as low as $12.50 Wednesday morning, more recently were trading 2.8% to $13.44.