Brean Murray cut its investment recommendation on First BanCorp (FBP to hold from accumulate on Friday.
Analyst Eric Rothmann says that a recently announced informal Securities and Exchange Commission inqury into First BanCorp pertains to the company's accounting of mortgage loans that were purchased from two other financial institutions between 2000 and 2004. He also said that First BanCorp retained two law firms as well as forensic accountants to aid in the review of the deals' accounting terms. Rothmann sees the completion of restatement of financials significantly extended.
Rothmann expects pressure on the shares over the near term. He notes that at the pre-opening price on Aug. 26, the stock was trading at 9.5 times his 2005 earnings per share estimate. He says the stock could trade down as far as $15.