Lehman Bros (NYSE:LEH) is trading down this morning in reaction to:
1) News of 3 funds closing (non-event)
2) Deutsche Bank's Mike Mayo saying while LEH's liquidity seems okay, he continues to expect more write-downs to equity (est. $2 bln in 2Q08) and tougher revenues this year. As a result, their estimates for the quarter and the year remain below consensus ($0.43 vs. $1.07 for 2Q08 and $3.95 vs. $4.69 FY2008) and still have a negative bias. Given an adjusted BV of estimate of $47 that is est. one-fifth above the stock price, and a new ROE range close to the avg. since the IPO (15%) but a price-to-book ratio that is one-third below, the firm maintains their Buy rating.
Notablecalls: While Briefing.com hilights DB's call this AM I know for a fact that Mayo was out with the call yesterday just before close. (You see the 1pt sell-off?). That makes LEH a bounce play around $39.50. He's not even negative on LEH.
I smell a squeeze.
1) News of 3 funds closing (non-event)
2) Deutsche Bank's Mike Mayo saying while LEH's liquidity seems okay, he continues to expect more write-downs to equity (est. $2 bln in 2Q08) and tougher revenues this year. As a result, their estimates for the quarter and the year remain below consensus ($0.43 vs. $1.07 for 2Q08 and $3.95 vs. $4.69 FY2008) and still have a negative bias. Given an adjusted BV of estimate of $47 that is est. one-fifth above the stock price, and a new ROE range close to the avg. since the IPO (15%) but a price-to-book ratio that is one-third below, the firm maintains their Buy rating.
Notablecalls: While Briefing.com hilights DB's call this AM I know for a fact that Mayo was out with the call yesterday just before close. (You see the 1pt sell-off?). That makes LEH a bounce play around $39.50. He's not even negative on LEH.
I smell a squeeze.
1 comment:
great call! i was thinking the same.
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