Third Analyst Says BOFA Should Lower Countrywide Bid

May 6, 2008 No Comments »


In just two days, three analysts have revealed disapproval over Bank of America’s current bid for ailing mortgage lender Countrywide Financial.

Today, Ladenburg Thalmann analyst Richard Bove said Bank of America should lower its acquisition price to just $1 per share at most because the risks outweigh the benefits involved in the deal, according to CNN.

He recommended that Bank of America only make a token bid for the ailing mortgage lender, expressing doubt over its loan portfolio, deterioration of its business model, and numerous legal cases.

However, Bove noted that he still thinks Countrywide is a good pickup for Bank of America because of its immense mortgage servicing platform that will allow it to become the largest residential mortgage lender in the nation.

Yesterday, two other analysts expressed similar sentiment about the proposed merger, with one Friedman, Billings, and Ramsey analyst suggesting that Bank of America walk away from the deal entirely or at least reduce the offering price to between $0 and $2.

S&P Equity Research analyst Kevin Cole said he believed the deal would be completed, but at a lower price because Countrywide’s assets continue to deteriorate.

Countrywide announced first quarter earnings last week, revealing that their total servicing portfolio delinquency rate climbed to 9.27 percent, up from 8.64 percent in the fourth quarter and 4.90 percent a year ago.

Shares of Countrywide were off 10 cents, or 1.88%, to $5.26 in afternoon trading on Wall Street.

(photo: lautenbach)

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