Legg Mason’s Estimates Lowered at FBR Capital (LM)

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Asset manager Legg Mason, Inc. ( LM ) saw its earnings estimates lowered on Monday by analysts at FBR Capital Markets.

The firm left its "Market Perform" rating and $33 price target for LM untouched, however.

FBR Capital commented, "We view such a valuation as appropriate because we think LM's core business should continue to trade at a discount to peers due to limited organic growth and ongoing risk of another round of institutional outflows. Our two-part valuation methodology is based on our view that it is inappropriate to capitalize the company's current 'cash earnings' without discounting for the finite life of the tax benefits… Additionally, we are lowering our FY 1Q11 EPS estimate to $0.33 from $0.38, and our FY11 and FY12 estimates to $1.46 and $1.74 from $1.59 and $1.78, respectively."

Legg Mason shares rose 11 cents, or +0.3%, in premarket trading Monday.

The Bottom Line
We had removed LM from our "recommended" list last Sept.15, when the shares traded at $36.30. The company has a .49% dividend yield, based on Friday's closing stock price of $32.37. The stock has technical support in the $28 price area. If the shares can firm up, we see overhead resistance around the $35-$36 price level. We would remain on the sidelines for now.

Legg Mason, Inc. ( LM ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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