Magazine article American Banker

Countrywide Stock Downgraded, but Profit Seen Doubling in Year

Magazine article American Banker

Countrywide Stock Downgraded, but Profit Seen Doubling in Year

Article excerpt

A prominent analyst has downgraded Countrywide Credit to "neutral" because of its stock price.

Jonathan E. Gray, at Sanford C. Bernstein & Co., New York, lowered his stock rating to "market perform," citing the home mortgage industry's strong recovery since he awarded an "outperform" rating a year ago.

His report said the stock is in line with its historical valuation.

Mr. Gray said he has no special problem with the mortgage industry or with Countrywide's place in the market.

In fact, he said he expects earnings per share a year from now to roughly double those in the fiscal quarter that ended last month.

In the report, Mr. Gray said he does not expect the same earnings volatility seen during the price war in the lender's last fiscal year, which ended in February.

"Making conservative assumptions regarding the company's ability to capture market share longer-term, and given stable interest rates - a big assumption," Bernstein estimates Countrywide's per- share earnings could grow "at a 15% pace for the next several years," Mr. …

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