Cantor Fitzgerald Reiterating Buy On KBW (KBW)

Cantor Fitzgerald is reiterating its Buy rating on shares of KBW KBW but lowering its price target to $30 from $35 after the bank missed estimates due to lower Principal Transactions revenue. In the report, Cantor Fitzgerald writes, "KBW reported 2Q:10 EPS of $0.22, versus consensus of $0.26. The reason for the "miss" was lower Principal Transactions revenue (down 83% sequentially), namely, fixed income trading (down 47%), equity market-making (small loss), and investments (loss, not on TRUP-backed CDOs). While 2Q:10 is a reminder that there is some risk in KBW's balance sheet, we note that, in a very difficult quarter worldwide, KBW still produced positive Principal Transactions revenue. We expect a bounce-back in 3Q:10, and more so in 4Q:10 and 2011." "We expect an M&A boom in 2011, with capital-raising and M&A driving EPS to $1.95. Our target price of $30 (down from $35) is based on the average 2011 P/E of most relevant peers/M&A boutiques (15x, down from 18x at the time of our previous report). Shares of KBW are down 41 cents, to $23.33