Magazine article American Banker

Nat City Gets Downgrades; Analysts Bullish on Amex

Magazine article American Banker

Nat City Gets Downgrades; Analysts Bullish on Amex

Article excerpt

National City Corp. received two downgrades from Wall Street analysts on Wednesday, a day after the Cleveland company reported a decline in fourth-quarter net income and told analysts to reduce their expectations for the coming year.

The company restructured its balance sheet last year by exiting auto lending and wholesale consumer lending. On Tuesday it announced profits fell 10.3% from a year earlier, to $308 million, or 50 cents per share.

The average analyst estimate for the company's profits this year was $2.33 per share, but management told investors to expect per-share earnings of between $2.12 and $2.22.

Operating earnings per share remained flat, at 55 cents, in line with the analyst consensus. However, Kenneth F. Puglisi of Sandler O'Neill & Partners, who had estimated the company would earn 58 cents, downgraded the stock on Wednesday to "outperform" from "buy."

In his research note, Mr. Puglisi wrote that the company's lowered expectations for earnings this year could "result in some short-term pain for the stock."

Seth L. Elan of Friedman Billings Ramsey & Co. in Arlington, Va., also downgraded the stock, to "market perform" from "accumulate."

"Although we anticipate that National City will participate in any group rally in anticipation of Fed action, we believe that at $30 per share, the stock is fully valued, given current fundamentals," he wrote in his note.

Since National City announced its restructuring plans in July, its shares have appreciated 42. …

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