Disappointing third-quarter results from Marshall & Ilsley Corp.'s technology subsidiary, Metavante Corp., prompted an analyst to cut his earnings estimates Tuesday for the Milwaukee banking company.
David Konrad, an analyst at Keefe, Bruyette & Woods Inc., trimmed his 2006 estimate by 4 cents per share, to $3.18, and his 2007 estimate by 7 cents, to $3.45, but he maintained his "market perform" rating on the stock. He cited more conservative loan growth assumptions and, to a lesser extent, lower fee income expectations.
In the third quarter, M&I's core fee income growth was weaker than expected, Mr. Konrad said in a note to clients, and "weaker than expected data processing fees from Metavante accounted for a majority of the shortfall."
Metavante's income grew 32%, to $41.2 million, from the year earlier, and revenue grew 16%, to $373.8 million. But analysts on M&I's conference call Monday noted that the unit's revenue was almost flat when compared with the second quarter.
Frank R. Martire, Metavante's president and chief executive officer, said that the unit has had 8% organic growth year-to-date and that he expects full-year results to at least equal 2005's 5% organic growth. "But I'll also tell you, we don't manage the business quarter to quarter," he said on the call. "We look at the full-year outlook and our expectations."
