Earnings Preview: Marshall & Ilsley

Marshall & Ilsley (MI) is expected to report Q2 earnings before market open on Wednesday, July 16, with a conference call scheduled for noon ET.

Guidance

Analysts are looking for EPS of ($1.56) on revenue of $624.08M. The consensus range for EPS is ($1.63) to ($1.42), while the consensus range for revenue is $606.60M to $635.90M, according to First Call.

Analyst Views

RBC Capital on July 14 said it has concerns about the bank due to its exposure to the Upper Midwest region. On July 7, Marshall & Ilsley announced that it expects to record a Q2 loss of ($1.50) to ($1.60) per share. The bank explained that it would take a Q2 loan and lease loss provision of up to $900M, about $485M higher than expected.

J.P. Morgan responded to the news by dropping the bank's stock to Underweight from Neutral. The firm believes Marshall & Ilsley's announcement indicates that its credit pressure is much worse than they expected. The firm recommends that investors sell Marshall & Ilsley's stock until the bank's credit outlook becomes more stable.

On a more optimistic note, Bernstein wrote that they still believe the company will report a 15% return on tangible equity by 2010, leading to a significant premium over tangible book value. The firm maintained their Outperform rating but reduced their target to $25 from $27. :