Legg Mason Inc. shares plunged more than 5 percent Tuesday, after investors reacted negatively to news the investment manager will take a big charge in the latest quarter.
Legg Mason expects a $154.5 million non-cash charge related to the declining value of money market funds at its Western Asset Management unit. That will lop $1.09 per share from the company's second-quarter earnings.
On Tuesday, analysts reacted to the news, lowering their earnings forecasts accordingly and reducing their share-price targets.
Friedman, Billings & Ramsey Co. analyst Matt Snowling cut his price target for Legg Mason to $49 from $58 because of the charges.
"We believe the company's latest round of capital support arrangements for its underlying funds represents further delay in an upside catalyst for the stock," Snowling wrote in a research note.
Jefferies & Co. analyst Daniel Fannon cut his fiscal first-quarter estimate to a loss of 15 cents per share from earnings of 99 cents per share. He put his price target at $48, down from $57.
Separately, Moody's Investors Service said it had placed Legg Mason's debt ratings on review for possible downgrade, following the company's announcement.
Legg shares fell $2.32, or 5.3 percent, to $41.25 Tuesday. Earlier in the session, the stock hit a 5-year low of $39.62.
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