Diane B. Glossman, an equity analyst at UBS Warburg, upgraded four big securities firms to "buy" from "hold" in a research report Wednesday, arguing that their stock is cheap enough to warrant another look from investors.

Ms. Glossman upgraded Morgan Stanley Dean Witter & Co., Lehman Brothers, and Goldman Sachs Group Inc. and Merrill Lynch & Co Inc. "This is a point where you can consider reinvesting." Ms. Glossman told investors in a conference call Wednesday morning.

But even as she upgraded the group, she cut her earnings estimates for the quarter and for the year.

"The dismal capital markets conditions will be fully reflected in third-quarter results," she wrote in her research note. But much-needed expense cuts will not be in evidence, since management at these companies let the summer pass without making enough job cuts to offset diminishing profits, she wrote.

Morgan Stanley, Lehman, and Goldman ended their fiscal third quarters Aug. 31 and are expected to post results in mid-September. Merrill operates on a regular calendar.

Ms. Glossman cut her third-quarter earnings forecast for Morgan Stanley by 2 cents, to 66 cents, and her full-year forecast by 7 cents, to $3.18. She expects Lehman to post earnings of $1.16 for the third quarter, down 15 cents, and $5.26 this year, down 22 cents.

She changed her estimate for Goldman to 83 cents per share, down 8 cents, and $4.23 this year, down 27 cents, respectively. Ms. Glossman expects Merrill to report earnings of 45 cents for the quarter that will end Sept. 30, down 3 cents, and $2.49 for the year, down 4 cents.

Ms. Glossman was not alone in making last-minute adjustments before earnings. Joan S. Solotar, an analyst with Credit Suisse First Boston, slashed 11 cents from estimates for Lehman, to $1.12 for the quarter, and 6 cents for Goldman, to 70 cents. She also cut a hefty 21 cents from her estimate for Bear Stearns Cos., to 83 cents a share for the quarter.

In a report issued Wednesday Ms. Solotar left her outlook for Morgan Stanley at 67 cents, noting that the company, which had a slow second quarter in underwriting, "had huge market-share gains in the third quarter."

She kept Morgan Stanley and Goldman on "strong buy," saying they should get the greatest lift when business picks up again. She left Lehman and Bear Stearns on "hold."

Early Wednesday morning the market gave brokerages a lift, but they fell back in the afternoon amid widespread declines. Morgan Stanley closed down 0.94%, Lehman 0.59%, and Goldman 1.34%. (Merrill's stock rose a minuscule 0.15%.) The American Banker index of 225 banks was down 1.28% and the index of the top 50 banks 1.25%.

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