Shares of SouthTrust Corp. fell Monday after the company was downgraded by a J.P. Morgan analyst, and Sovereign Bancorps dropped despite bullish remarks by a Sandler ONeill & Partners analyst.
Michael L. Granger of J.P. Morgan cut SouthTrust to market perform from buy, citing a slowdown in the Birmingham, Ala., regional banking companys net interest income. On Wednesday, SouthTrust reported that its third-quarter net interest income had dropped 12% from the year earlier. Its per-share earnings rose 16.1%, to 72 cents. In his research note, Mr. Granger wrote that SouthTrust, which he said should earn $2.85 per share this year, will enter 2001 with a substantially reduced revenue base. Even if it is able to stabilize the net interest income situation and begin to grow it again, estimates will have to come down. He reduced his estimate for next years per-share earnings by 19 cents, to $2.96.