A day after slamming Thornburg Mortgage, Merrill downgraded Countrywide Wednesday morning, shifting its recommendation from a buy to a sell.
Merrill felt that Countrywide would be in a situation similar to that of Thornburg, and that shares of the mortgage lender would likely encounter increased downward pressure.
Investors took the news in stride however, remembering that Countrywide services their own loans, and is able to hold onto a number of securities without being forced to dump them off below market prices.
Shares of Countrywide were down less than 5% in midday trading, a sign that investors are more comfortable with the company, and perhaps because of the turnaround this morning with Thornburg.
That and the fact that Merrill didn’t seem to point out anything terribly specific with Countrywide that the other lenders out there aren’t facing.
It should be noted however that Countrywide shares are already nearly 50% below their high of $45.26, where the company sat around six months earlier.
Look for the company to continue to suffer as an industry bellwether as more bad news is released by rival banks and lenders nationwide.
Update: Shares dipped as low as $19.25, but ended the day at $21.29, down $3.17, or 12.96%!