Bank of America Downgraded by Mosby

NEW YORK ( TheStreet) -- Bank of America ( BAC) received a downgrade Monday from Guggenheim Securities analyst Marty Mosby, the latest of several downgrades and downward earnings revisions for the struggling financial behemoth.
The bank has repeatedly been downgraded ahead of its 3rd quarter earnings report.

Mosby dropped Bank of America to "neutral" from "buy" while lowering his price target to $6.50 from $10. Nonetheless he believes Bank of America "represents one of the highest potential long-term returns."

"The acquisition of Merrill Lynch and Countrywide has placed Bank of America at the center of the residential real estate issues: foreclosure process and mortgage repurchase losses. In our opinion, Merrill Lynch and Countrywide participated in the riskiest portions of the mortgage market at its peak, and, more than likely, due to a lack of regulatory oversight, they were not forced to ensure the documentation of all of the loans they packaged into securities were fully completed. As a result, we believe while not fatal, Bank of America will have to deal with these issues throughout 2011 and 2012," the report states.

Mosby also upgraded Northern Trust ( NTRS) to "buy" from "neutral," Monday, arguing its "consistent dividend payouts throughout this cycle create a current dividend yield advantage, which we believe is favorable for this environment."

-- Written by Dan Freed in New York.
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