Shares of Lehman Brothers Holdings fell nearly 13% today on negative analyst comments, slicing about $2.2 billion off the investment banks market value in two days. The stock had a market capitalization of $11.2 billion at the close of trading Friday, but is now valued around $9 billion in midafternoon trading today.
Analyst Kenneth Worthington at JPMorgan Chase & Co. today warned in a note to clients that Lehman might have to write down another $4 billion in mortgage-related assets this quarter, on top of the $8 billion the firm already has written down since the subprime crisis erupted last summer. He also expects Lehman to report a loss in a difficult third quarter and lowered his earnings estimates for 2008 to show bigger losses.
Lehman continues to have significant exposure to mortgages and asset-backed securities. We believe management wants to leave its mortgages troubles behind, wrote Mr. Worthington, who maintained his neutral recommendation for the stock.
He added that he did not expect Lehman to sell its asset management business, Neuberger Berman. However, talk is mounting that Lehman could sell all or part of its asset management unit to private equity groups.