Merrill Lynch & Co Inc faces a $1.5 billion third-quarter loss on its fixed-income business, driven by $4 billion in asset write-downs connected to leveraged loans and mortgages, a Goldman Sachs analyst said on Wednesday.
We are assuming a $1.5 billion total loss on the (fixed-income) business, analyst William Tanona said in a research note.
The report sent Merrill Lynch's stock lower. The shares were down $2.03, or 2.8 percent, to $70.09 in afternoon trade on the New York Stock Exchange.
Merrill Lynch said it does not comment on analyst notes.
Tanona said his expectation is that Merrill Lynch, the world's largest brokerage, will have $4 billion in mark-to-market losses from plunging values on leveraged loans, collateralized debt obligations and mortgages.
The analyst cut his third-quarter earnings-per-share estimate for Merrill Lynch to 15 cents from $1.95. Analysts on average are looking for $1.80 a share, according to Reuters Estimates.
But recently, analysts have been slashing their estimates for Merrill after rival investment banks reported big write-downs earlier this month.
Merrill has not announced the date of its third-quarter earnings release, but it is expected to land in the third week of October.
(Reporting by Tim McLaughlin)