This has to be one of the more amusing upgrades I have ever come across. Countrywide Financial (CFC) Ups from 1 STAR (strong sell) to 2 STARS (sell) Analyst: Stuart Plesser Countrywide's shares have fallen over 10% year-to-date, in our view leaving only modest downside potential. We are concerned about Countrywide's exposure to the subprime market and the possibility of loans being put back to Countrywide due to higher default rates. We also believe that Countrywide's gain-on-sale margin will fall due to a widening of credit spreads in the securitization market. Finally, we remain cautious about Countrywide's option ARM loans, which comprise over 40% of loans held. We are lowering our target price by $2 to $36, 8.2 times our 2007 EPS estimate of $4.37, a discount to Countrywide's historical average. FWIW I am heavily short.
LOL. It's an upgrade from "we absolutely despise the stock" to "we hate the stock". Analysts...what a joke.
The CEO has sold some $78 million since Nov! CFC is like the andrea gail in the perfect storm of housing drop off, loan repricing, and lending standards tightening. Meaning, fewer, smaller, much less profitable underwritings. Looks like another potential New scenario within 1-2 quarters depending on how long they can keep the numbers from reflecting the reality that others are already acknoledging.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAfTrKZokGRk&refer=home March 1 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S. mortgage lender, said payments were late on almost 20 percent of the subprime loans it manages for clients. Delinquencies of 30 days or more on ``nonprime'' loans, or those to borrowers whose credit ratings fell short of the highest criteria, widened to 19 percent as of Dec. 31 from 15 percent a year earlier, Countrywide said in a regulatory filing. The data reflect loans not owned by Countrywide where the company performs billing and record-keeping. Hmm wonder when this penny dropped? Nice of the bagholders to take the CEO's shares while he knew this info and presumeably they didn't, wasn't it?
Nevermind...Mr Toad's wild ride right now...not going to take a position unless this pig ruffles its feathers and the options prices come out of orbit.