First Marblehead shares continue to slide

Sandler O'Neill & Partners analyst Michael Taiano upgraded Boston-based First Marblehead's stock to "Hold," given that shares are trading in range of his $3.25 price target--an amount he said "approximates the amount of cash held on its balance sheet."

First Marblehead shares fell 15 cents, or 4.8 percent, to $2.96. The stock traded above $40 last fall, but has since lost most of its value as turmoil in credit markets has spread from mortgage lending to other areas such as the student loan market, which has seen rising defaults among student borrowers.

Taiano said in a research note that First Marblehead's management "has its work cut out for it, as it attempts to restructure the business, and how successful it will be, particularly in such a tumultuous environment, remains highly uncertain."

On Thursday night, First Marblehead Chief Executive Daniel Meyers outlined steps the company is taking to cut costs and revamp its private student loan products.

But Taiano said he is still concerned about the company's cash burn rate, although he said recent job cuts at the management level should help conserve cash.

On Monday, First Marblehead said Chief Financial Officer John Hupalo resigned, with Kenneth Klipper, the firm's treasurer and chief accounting officer, filling the CFO position immediately.

First Marblehead receives fees for helping banks package their private student loans into bonds, which are then sold to investors.