Wells Fargo to write down $40 billion in Q4: Bove

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(Reuters) - Ladenburg Thalmann's Richard Bove cut his price target on Wells Fargo & Co and said the bank intends to write-off $40 billion in the fourth quarter related to the acquisition of Wachovia Corp .

Shares of Wells Fargo were down 9 percent at $26.56 in afternoon trade on the New York Stock Exchange.

Bove now expects Wells Fargo to incur a loss of $6.09 per share in 2008, compared with his prior view of $2.14 a share profit.

The analyst said the bank's loan losses were rising because of weakness in the economy and margins were being stressed by the decline in asset yields.

Bove said Wells Fargo Chief Financial Officer Howard Atkins acknowledged at a presentation in New York that the bank would see a drop in margins.

"Wells Fargo's problem in this area is that it cannot cut deposit costs in the current environment while the markets continue to cut rates overall," the analyst said. He cut his price target on the stock by $3 to $37.

Bove said positive elements in the long term were that the bank had not stopped lending and was gaining market share. He expects the Wachovia deal to improve earnings when the economy stabilizes beginning in 2011.

"Wells continues to be the pre-eminent bank in this country at the moment with the best record. It is worth owning," Bove said, while maintaining his "buy" rating on the stock.

(Reporting by Adheesha Sarkar in Bangalore; Editing by Anil D'Silva)

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