Legg Mason downgraded National Commerce Financial (NCF ) to sell from hold.
Analyst Christopher Mutascio say three cents to four cents of the company's predicted earnings per share shortfall is due to net interest margin compression. He says valuation is expensive in light of lower earnings expectations and the belief that p-e multiple compression relative to the broader market will occur for mid-cap bank industry.
Mutascio sees earnings per share numbers in the sector coming down, and sector rotation occurring out of what has been considered a safe haven for the last two to three years. He cut his $1.74 2003 earnings per share estimate to $1.60, and cut the $1.93 2004 estimate to $1.82 (both excluding litigation charges.)