Astoria Financial gives back recent gains

Astoria Financial Corp. shares slumped Monday after research firm Stifel, Nicolaus downgraded the stock, advising investors to take profits following sharp gains last week.

Analyst Collyn Gilbert cut Lake Success, N.Y.-based Astoria and several other financial stocks to "Sell" in a note to investors Monday. The stock dropped $2.64, or 11.1 percent, to $21.06 in afternoon trading. In the past year, it has ranged from $16.65 to $30 _ a level it hit Friday.

That day saw the broader market continue a stunning two-day rally on news that the federal government would buy billions of dollars in bad, mostly mortgage-related debt in a move to help loosen the rigid credit markets. Financial stocks led the gainers.

Gilbert downgraded Astoria because the stock's sharp gains Thursday and Friday left it overpriced for a savings and loan bank that still faces a difficult credit market, the analyst said.

"We believe this premium is unwarranted given the expected slowdown in the company's overall business, coupled with higher expected credit losses," the analyst wrote.

Gilbert said the market is being driven by "short-term factors and overt emotions," and warned that volatility and uncertainty abound. "Take profits when you can."