Analysts are dancing around insolvency here… ----------------------------------------------------------------------- Wachovia’s stock opened at $8.66 per share Tuesday and dropped to $7.85 per share, down more than 20 percent from Monday’s close. Shares were back up to $9.94 in early afternoon trading, a 1 percent gain from Monday’s close of $9.84. The Charlotte, N.C.-based bank’s shares are down some 80 percent from a year ago. Meredith Whitney, an analyst with Oppenheimer & Co., cut her rating on Wachovia’s stock to “underperform.” She said Wachovia is cutting its mortgage loan portfolio at at time when losses are growing, which will result in higher loss ratios, lower assets and lower net interest income. That will impair the company’s ability to generate earnings, she said. “In this very real scenario, expenses simply cannot come down fast enough, seriously jeopardizing Wachovia’s ability to generate earnings,” she wrote.
Because Meredith loves the financial sector. Isn’t she the one who HATES Citigroup?
its true, she has been persistently bearish. had to embarassingly retract a statement about lewis guaranteeing the dividend. Nonetheless, the stock is trading at distressed levels, looking inot the barrels of a terrible portfolio.
Dodge & Cox was so terribly wrong on this one.
a shame…a good shop too…
I don’t keep track of Whitney’s recommendations, but what good does a downgrade of Wachovia shares do AFTER they’ve already fallen 20%?
I think that was my point. What is she really saying here? I am starting to read that she thinks WB may not be a going concern…this bank cannot generate the liquidity to sustain losses through 2009. “In this very real scenario, expenses simply cannot come down fast enough, seriously jeopardizing Wachovia’s ability to generate earnings,” she wrote.
Recommendation Date Close Price underperform 07/15/08 9.08 market perform 07/10/08 13.13 market perform 04/15/08 25.42 market perform 03/26/08 28.02 market perform 01/24/08 36.59 market perform 01/14/08 36.29
A real problem here is employee discontent. Large parts of bonuses in past years were paid in WB stock.
ouch. unfortunately for WB employees, there is nowhere to go.
Unfortunately for WB employees, they work for WB.