Analysts are sticking by Cityscape Financial Corp., despite a rough summer. "Compared to similar companies, like United Companies or the Money Store, Cityscape is way undervalued," said Merrill H. Ross, an analyst with Wheat First Butcher Singer, based in Richmond, Va.

If observers focus on earnings potential, the "future looks very bright for Cityscape," Ms. Ross added.

Neither Wheat First Butcher Singer, Bear Stearns, Natwest Securities, nor Oppenheimer & Co. has changed its recommendation on the home equity lender's stock, despite bad press, fears that Cityscape's English lending business may be threatened, and a recent readjustment to second-quarter earnings.

On Sept. 27, the Elmsford, N.Y., company restated its second-quarter earnings, from $1.05 to 27 cents, citing an adjustment in the purchase price of United Kingdom acquisitions.

The announcement spurred the highest trading volume in the company's public history, 1.55 million shares versus an daily average of under half a million.

Although media reports have attributed the correction to "overaggressive accounting," some analysts argue that the readjustment signals a rosier picture in the future.

One of Cityscape's gems, its United Kingdom lending business, is under fire. The company makes loans to borrowers with poor credit in the virtually untapped U.K. home equity market.

Cityscape's entry into that market was heralded by many analysts as a brilliant move, as loans there can bring much higher margins than similar loans in the United States, because of lack of regulation.

But the loans, often featuring negative amortization and super-high prepayment penalties, have been under scrutiny by members of the U.K.'s Labor Party, which is threatening to make them illegal.

English press reports calling them "loans from hell" have caught the U.S. media's eye.

But again, analysts argue the bad press should have little effect on Cityscape's bottom line. The Labor Party, which threatens to regulate Cityscape's lending in England, "isn't in control now, and hasn't been for 20 years," Ms. Ross noted.

Cityscape's stock has been buffeted in the past three months as the company faced media scrutiny, selloff speculation, and accounting glitches.

The stock climbed from $22.75 in early June to a high of $36.5 on Aug. 5, only to fall to $24.81 on Sept. 25.

Rumors following the Aug. 5 high were responsible for a dramatic 12- point slide. Reports circulated that Cityscape was considering a second public offering, and the stock went into a free-fall before recovering. Cityscape issued a press release Aug. 29 saying it might file for an additional public offering of five million shares - smaller than many estimates.

On Sept. 5, The Wall Street Journal tied a sometime Cityscape consultant Jay Botchman to a tax-shelter promoter convicted of fraud.

Mr. Botchman is credited with introducing Cityscape to a company it acquired in England, but Cityscape and analysts say his connection with U.S. company is inconsequential.

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