Ladenburg Thalmann analyst Dick Bove cut his target on Merrill Lynch (MER). But Bove didn't focus on Merrill's fragile capital position, or even on the possibility of further writedowns. Bove wanted to know where, as Merrill's core business continues to deteriorate, Merrill will make money:
The answer to this question remains difficult to discern since most of the key revenue drivers of the past few years do not look very strong at all.
Bove also said that Merrill's dividend payout, roughly $500 million per quarter, remained a "burden." This being the case, Bove predicted that the dividend will soon be cut:
There seems to be little merit in continuing to make this expenditure. The company has not expressed a desire to cut the payout... My assumption is that a reduction will be announced soon
Bove reiterated his Sell rating and cut his price target from $30 to $25.
