Salomon Lowers Mellon Financial Rating
Salomon Smith Barney downgraded Mellon Financial (MEL ) to underperform from in-line.
Analyst Ruchi Madan says he thinks Mellon shares will be weak given his view that 2003 estimates need to come down by about 20 cents following weaker-than-expected fourth quarter results. He notes fourth quarter earnings per share fell short of his 42 cents estimate; earnings per share included a three-cent severance charge, but there were other items that resulted in a lower earnings run rate.
Due to a lower-than-expected run rate, and higher-than-expected incremental expenses tied to several noncore issues, Madan cut the 2003 earnings per share estimate to $1.70, vs. the $1.90 consensus.