S&P Equity Research Downgrades IndyMac Bancorp (NDE) to Sell
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S&P Equity Research downgrades IndyMac Bancorp (NYSE: NDE) from Hold to Sell.
S&P analyst, S. Plesser, says, "Our downgrade reflects our view that default rates will pick up significantly for Alt-A loans. As mentioned in an earlier research note, NDE's 30-day delinquency rate for its Alt-A loans at 12/31/06 totaled 5.4% compared to 22.7% for subprime loans. But in a difficult housing market, we think defaults on Alt-A loans, roughly 80% of NDE production, will rise significantly because of an inability for borrowers to refinance. We are lowering our target price by $6 to $26, 6.6X the $3.92 EPS we see in '07, below historical P/Es to reflect likely further credit deterioration."
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