Oppenheimer’s Whitney Cuts U.S. Bank Estimates - Again

Just when you thought it was safe to take a look at the U.S. banking sector, Oppenheimer & Co. Inc. analyst Meredith Whitney is taking a cleaver to industry once more, cutting first quarter earnings estimates for a bunch of banks.

“It’s back to the chopping block,” declares Ms. Whitney in a note outlining more doom and gloom for the industry despite the Federal Reserve’s recent injection of cash that appeared to have settled nerves on Wall Street.

Ms. Whitney is the bearish analyst whose downgrade of Citigroup Inc. (C) last year led to a global sell-off of banking stocks. Now Oppenheimer is reducing first quarter earnings estimates by 84% on average for the U.S.banks to reflect more mortgage writedowns and higher charges on collateralized debt obligations, and commercial mortgage backed securities.

Ms. Whitney forecasts Citigroup will record a per share loss of $1.15 in the first quarter compared to her previous estimate of a loss of $0.28. She rates Citigroup, Merrill Lynch & Co. (MER) and UBS AG (UBS) “underperform,” and warns that earnings estimates could yet fall further.

Ms. Whitney said:

Since November, we have cut estimates for financials over 30 times, with no clear end in sight. As key mark-to-market indices trend lower, the housing market worsens, and the U.S. consumer comes under increasing pressure, we anticipate further downside to both estimates and stock prices.

Comments

[invest-long...:]

Whitney has been the most pessimistic and most correct of financial analysts so far, but she could easily be ignoring the fact that the sector may turn before the worst headlines. Of course, she thinks they will get even worse, but then she has had to revise estimates 30 times (you'd think she would get to a point after a few tries, where it would not be necessary to revise so often). She might have to revise estimates once again one of these days - upwards!

2008 Mar 27 11:37 AM

[jimmy46:]

I assume the sharp cut in interest rates will provide a bonanza for most banks, has anyone quantified that?

2008 Mar 27 03:03 PM

[swissstocks:]

Good forecast for UBS witth the huge write-down announced this morning ;o(

2008 Apr 01 02:44 AM