A Banc of America Securities analyst upgraded Countrywide Financial Corp. on Friday, writing that the risk of "a liquidity-induced distressed sale" of the top home lender had been greatly reduced.

However, the analyst, Robert Lacoursiere, remained tepid in his assessment of the Calabasas, Calif., company's prospects. He raised his rating from "sell" to "neutral," and predicted that Countrywide would emerge from the current industry crisis smaller and much less profitable.

In a note to clients, Mr. Lacoursiere wrote that "the imminent near-term danger" of Countrywide's going bankrupt — a possibility raised in a widely read report last week from a Merrill Lynch & Co. Inc. analyst — "is diminished" now that it has drawn $11.5 billion from an unsecured credit line.

Still, "sizable risks remain," wrote Mr. Lacoursiere, who slashed earnings estimates for this year and next. He projected an 18% drop in gain-on-sale revenue, to $429 billion, this year and a 20% decline next year, to $428 billion.

After several days of heavy selling, Countrywide shares rallied Friday, following the announcement of the Federal Reserve rate cut. They closed at $21.43, up 13% from Thursday's closing price.

Also Friday, Fred Cannon, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., reaffirmed his "market perform" rating on Countrywide but lowered earnings estimates to 65 cents a share in 2007 (from $2.75 a share) and to $1.92 a share in 2008 (from $3.20 a share).

He also cut his price target to $20 a share from $29, on the view that the transition to a thrift company selling mostly agency-eligible mortgages will radically reduce profitability.

"One likely outcome of the current situation would be a capital infusion," either through an equity placement or a sale of pieces of its business to a well-capitalized partner, Mr. Cannon wrote. "A capital infusion would improve the long-run strength of the company's operations."

Mr. Lacoursiere described a worst-case liquidation scenario for Countrywide. He estimated that if forced to sell assets, the company would have to take a 6.2% discount — or $13.9 billion — on the book value of its loans and securities.

One of its most valuable assets, a servicing portfolio, would likely be valued at $17 billion, or a 15% discount, he wrote, while the production platform would command roughly $5.2 billion.

David Hendler, an analyst at CreditSights, a bond research firm, wrote in a report Thursday that if liquidity remains a problem over time, Countrywide's servicing and origination platforms "represent an attractive takeover play for a large bank," such as Bank of America Corp., JPMorgan Chase & Co., or Citigroup Inc. Countrywide would be "significantly accretive" to such a buyer, he wrote.

Press reports Friday indicated that nervous Los Angeles-area customers of Countrywide Bank had been withdrawing deposits. But at least two Countrywide branches in the area were quiet on Friday.

Still, Countrywide took the trouble to issue a press release Friday afternoon reminding consumers that its deposit products are FDIC-insured.

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