Lehman Brothers may report about $4 billion of writedowns on credit-related investments and other assets when it posts earnings for the quarter that will end Aug. 31, according to a team of JPMorgan Chase & Co. analysts.
"The credit environment continues to be difficult," the New York analysts, led by Kenneth Worthington, wrote in a report issued Monday.
Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined as much as 20%, the analysts wrote. The company may have already been selling some commercial mortgage assets, the report said.
Shares of Lehman, the largest underwriter of mortgage bonds before the subprime market collapsed, have slumped roughly 77% in New York trading in the past year as the company has struggled to pare its debt holdings.
For the quarter, the JPMorgan Chase analysts now expect Lehman to report a loss of $3.30 a share, versus a previous forecast of a 35-cent profit. The analysts increased their loss forecast for the full fiscal year by $4.42, to $6.77.
They maintained a "neutral" rating on Lehman's stock.