Analyst sees calamitous quarter for Merrill

Goldman Sachs analyst William Tanona expects Merrill's third-quarter earnings to decline by 89% to $208.9 million.
SEP 27, 2007
A Goldman Sachs analyst has slashed earnings estimates and price targets on Merrill Lynch. Goldman Sachs Group Inc. analyst William Tanona slashed earnings estimates and price targets on Merrill Lynch & Co. Inc. Predicting a rough third quarter, Mr. Tanona said that Merrill faces a third-quarter write down of as much as $4 billion to reflect losses on mortgage-related securities and buyout-financing commitments, according to published reports. He said that he expects Merrill's third-quarter earnings to decline by 89% to $208.9 million, or 15 cents a share, from $1.94 billion, or $2 a share, not counting a gain, a year earlier. Mr. Tanona also said that he acted based on weak results reported last week by other securities firms whose third quarter ended in August. Merrill's third quarter ends on Sept. 30. Merrill "appears to be caught in the cross hairs of a number of headwinds" including losses on loan commitments and mortgages, according to a Wall Street Journal report. Susan Katzke, an analyst at of Credit Suisse Group, also cut her third-quarter Merrill estimates to $1.25 a share from $1.60, according to the WSJ report.

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