A 'flight-to-quality'
Merrill raises Wells Fargo rating, cuts BB&T
Excerpt:
Merrill Lynch said Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz) is well-positioned to outrun credit deterioration through strong revenue growth and raised its rating on the bank to "neutral" from "underperform."
Merrill said the deepening credit crisis is creating revenue opportunities for those banks that have a strong capital base and are generally experiencing a 'flight-to-quality' revenue benefit.
"Wells is experiencing this benefit the most," analyst Edward Najarian wrote in a note to clients.
The brokerage expects net interest income growth to be exceptionally strong at Wells Fargo and raised earnings estimates for the bank through 2010.
Merrill raised 2008 profit estimates for Wells Fargo to $2.16 a share from $2.10, 2009 view to $2.50 a share from $2.10 and 2010 outlook to $3.20 a share from $2.75.
Comment: A 'flight-to-quality' is when someone says ... I think it is safer to have my money in a stronger institution.
Yeah, but does a recommendation from an essentially bankrupt institution like Merrill Lynch mean a whole lot? I think the sustained decent stock price of Wells says a whole lot more than anything Merrill Lynch could at this point.
ReplyDeleteAnd granted, not everybody at ML contributed directly to its collapse, but if we don't know what parts did and did not.....