This morning, KBW downgraded shares of Fannie Mae (FNM) and Freddie Mac (FRE) to Underperform and reduced its price target to zero for both companies. The firm believes both companies need to recapitalize through the banks, with the banks retaining equity on each loan sold to Fannie and Freddie. Such a move would save mortgage agencies, but the end result would be the common and preferred equity being wiped out.
Following the downgrade by KBW, shares of Freddie Mac fell a little more than fifteen and a half percent, while shares of Fannie Mae lost over sixteen percent.
Morgan Joseph downgraded shares of Callaway Golf (NYSE:ELY) from Buy to Hold this morning as third quarter results could come in below the firms estimates. The firm estimated earnings in the quarter of thirty two cents per share, but preliminary results are in the neighborhood of only twenty four cents per share. Margins were once again squeezed in the quarter as the consumer's still lack the confiedence to buy discretionary items at this time. The earnings were supported by better than expected cost-cutting measures, but in the short term the firm feels the company is fairly valued.
In morning trading, shares of Callaway Golf were falling hard, off more than six and a half percent following the downgrade.
And JP Morgan has grown bearish on Southwest Airlines (NYSE:LUV), downgrading the stock from Neutral to Underweight. This comes in a report where analysts at JP Morgan raised their rating on AirTran (AAI) from Neutral to Overweight. As the firm sees more opportunity for investors in AirTran, the price target was reduced for Southwest from $11.50 per share all the way down to $6.50 per share.
Shares of Southwest Airlines were trading lower Monday morning, off a little more than one percent.
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