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Wachovia Corporation ( WB : sentiment , chart , options ) is getting absolutely pummeled on Wall Street today, withbrokerage firms coming out of the woodwork to hand out downgrades,price-target cuts, downwardly revised earnings estimates, and awarning about possible dividend cuts. As if that weren't enough tohandle, the bank is also battling rumors that it's seeking abailout from one of its banking-sector peers.
First, the stock woke up to a price-target cut from analyst RichardBove at Ladenburg Thalmann, who slashed his expectations on thestock from $19 to $17. Bove reiterated his "neutral" rating, butalso lowered his 2008 earnings estimates on the bank from 69 centsper share to a loss of 23 cents per share.
Morgan Stanley, in part of a broader note on U.S. large-cap banks,also trimmed its own price target on WB from $26 to $12, a 54%reduction. Even more damaging, Morgan Stanley said it expectsWachovia to slash its dividend by 50%, compared to its priorforecast for a 25% cut. The broker expects the bank to take a 2008loss of 69 cents per share, down from its prior expectation for aprofit of $1.29 per share.
RBC Capital also jumped into the fray, dropping its price target onWB from $20 to $13 and restating its "sector perform" opinion. Notto be outdone, S&P Equity Research downgraded the stock from "sell"to "strong sell" (ouch) and dropped its price target from $13 to$11. And, in the coup de grace, Moody's stepped up to report thatit's placing Wachovia's ratings on review for possible downgrade.
In news that falls under the category of "no kidding," WB ChairmanLanty Smith said in a conference call today that "there is no quickfix" to the bank's problems. He talked up new CEO Robert Steel,though, and asserted that Wachovia has a "very strong capitalfoundation." As for the bank's dividend, the chairman demurred,noting that such discussion was premature.
Finally, addressing speculation that WB would seek to be acquiredby fellow investment bank Goldman Sachs (GS), Smith used thereassuring phrase "just silly." Wachovia is retaining Goldman as anadvisor on its loan portfolio, but the chair dismissed this task asa "one-shot relationship assignment."
At last check, WB was down nearly 5% to trade near $13.58. Earlier,the shares dropped to a 52-week low of $12.65.