Goldman, Merrill cut JPMorgan estimates

In the latest competitive twist between investment banks to see who will take the biggest hit from the subprime mortgage crisis, analysts at Goldman Sachs Group Inc. and Merrill Lynch & Co. cut their earnings estimates for JPMorgan Chase & Co. this morning, according to Crain's New York Business. Goldman Sachs analyst William Tanona cut his 2008 earnings estimate for JPMorgan to $3.30 per share, from $3.44 per share, citing higher expected losses and loss provisions on the bank’s $95 billion home equity portfolio. Separately, Merrill Lynch analyst Guy Moszkowksi cut his 2008 earnings-per-share estimate to $3.30 from $3.44. Both analysts have a “neutral” rating on JPMorgan stock. Overall, the average analyst estimate for JPMorgan is now $3.86 per share, down from $4.13 per share just a month ago. The news comes less than a month after analyst at Lehman Brothers and Deutsche bank lowered their first-quarter estimates for Goldman, saying the investment bank could face writedowns of nearly $3.5 billion. Earlier this week, Mr. Moscowkski cut his first-quarter and 2008 earnings estimate for Goldman. The news sent shares of JPMorgan down as much as 4% to $42.65 this afternoon. During an investor conference Wednesday, JPMorgan chief executive James Dimon said losses in the investment bank’s home equity portfolio could hit $3.7 billion if housing pricing fall 10% this year. Mr. Dimon said the bank has exposure to other risky assets as well, which could put a dent in short-term earnings.