It takes no shortage of guts to bet against Meredith Whitney these days. The analyst at Oppenheimer & Co. has become the go-to source for wisdom on where U.S. financial stocks are headed, and her bearish views on the sector affect similar stocks around the world, including Canada.
It is interesting, then, that Citigroup's Prashant Bhatia has decided to swim against the current, upgrading Lehman Brothers Holdings Inc. to a “buy”, with a 12-month target price of $65 (U.S.). The shares are down 40 per cent this year, trading at $38.99 on Friday afternoon.
“After being on the sidelines for a couple of years, we see the current valuation as an extremely attractive entry point into Lehman shares,” he said in a note to clients. “In our view, it's tough to have a liquidity-driven meltdown when you're being backed by government entities that have the ability to print money. Lehman has ample liquidity to run its business.”
Who do you side with, Mr. Bhatia or Ms. Whitney? Although Ms. Whitney is famous for making the right call on Citigroup (run!), her record on Lehman Brothers is mixed. She had an “outperform” recommendation on the stock in January, with a target of $79 – and only downgraded the stock to a “market perform”, and erased her target, after the stock's steep slide. On the other hand, Mr. Bhatia maintained a “hold” on the stock earlier and is only now becoming enthusiastic.
If Ms. Whitney has become the star analyst among bearish investors as financial stocks tumble, will Mr. Bhatia become the bulls analyst of choice if and when financial stocks recover?
