Analyst cuts 2Q projections for big firms

A Bank of America Corp. analyst has slashed second-quarter earnings estimates for Lehman Brothers Holdings Inc., The Goldman Sachs Group Inc. and Morgan Stanley, according to published reports. Write-downs will eat into the profits of all three New York-based firms, according to analyst Michael Hecht of Charlotte, N.C.-based Bank of America. Lehman Brothers will be the hardest-hit, he said, predicting a second-quarter loss of 50 cents a share. Mr. Hecht earlier had forecast a profit of 76 cents for the firm. The analyst now expects Goldman Sachs to post earnings of $3.45 a share, compared with an earlier prediction of $3.75, according to published reports. Mr. Hecht also cut his quarterly earnings estimate on Morgan Stanley to 95 cents a share, from $1.40. Lehman Brothers and Goldman Sachs saw profits fall more than 50% in the first quarter due to heavy market turbulence and the credit crunch, but both firms managed to beat Wall Street estimates (InvestmentNews March 18). Morgan Stanley also saw profits drop in he first quarter, but it exceeded analyst predictions (InvestmentNews March 19).