Goldman slashed its rating on Merrill Lynch, which has already lost more than 50% of its value so far this year, to ``sell'' as worries mounted that the bank could post more writedowns tied to the credit crunch. Adding insult to injury, the share-price estimate on the stock also was lowered 23%.

Goldman added the third-biggest U.S. securities company to its ``conviction sell'' list, according to a report by analysts including William Tanona. The share-price estimate on the stock was lowered 23 percent to $22, compared with yesterday's closing price of $26.21.

Merrill, battered by more than $40 billion of credit market writedowns, has sold mortgage-linked assets to reduce risk and free up capital. The company trades at 1.22 times book value, compared with 0.91 for Citigroup Inc., the only other firm that's reported larger writedowns and losses stemming from the credit market crunch, according to data compiled by Bloomberg.

``Merrill currently trades at the highest price-to-book multiple in our large-cap brokerage universe, despite having some of the most significant exposures to troubled assets such as CDOs, mortgages and leveraged loans,'' said the report, dated yesterday. ``With these markets still under pressure, we believe additional write-downs and book value deterioration will continue to plague the stock.''

Merrill is rated the equivalent of sell by four of 20 firms, including Goldman, according to recommendations collected by Bloomberg. The same number recommend clients buy the stock while the remaining 12 rate Merrill the equivalent of neutral.

Continue reading on bloomberg.com

Next article » NY, London Tie In Index Of Top Financial Cities

Previous article « Korea: All Hands On Deck?