UPDATE 1-Merrill cuts JPMorgan to underperform; sees Q4 loss

Mon. December 15, 2008; Posted: 10:02 AM

, Dec 15, 2008 (Reuters via COMTEX) -- JPM | Quote | Chart | News | PowerRating -- JPMorgan Chase & Co's near-term earnings are likely to remain under pressure from its exposure to consumer and corporate credit said a Merrill Lynch analyst, who downgraded the stock and forecast a fourth-quarter loss for the bank.

Analyst Guy Moszkowski sees JPMorgan building reserves in a continually worsening credit environment driven by a climbing unemployment rate and cut his rating to "underperform" from "neutral."

"While there is little doubt that JPMorgan will emerge from the current crisis in a good competitive position, it is increasingly clear that credit costs in the U.S. will get much worse, particularly in cards and commercial lending", Moszkowski said.

Moszkowski, who expects another $2.8 billion mark-to-market loss at the bank, reversed his fourth-quarter estimates to a loss of 11 cents a share from his prior view of 25 cents a share.

Analysts polled by Reuters expect the company to earn 35 cents a share, excluding items, for the fourth quarter.

Shares of the company were trading down more than 5 percent at$29.33 in morning trade on the New York Stock Exchange.

(Reporting by Sweta Singh in Bangalore, Editing by Dinesh Nair) Keywords: JPMORGAN/ (sweta.singh@thomsonreuters.com ; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: sweta.singh.reuters.com@reuters.net)

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