Trading Earnings: Legg Mason (LM)

Legg Mason, Inc (LM) is set to report earnings before the market opens on Friday, July 25th. Legg Mason is a global asset manager with $950 billion in assets under managements and serves the institutional, mutual fund and wealth management markets.

LM is expected to earn 13 cents per share for its ist quarter. We expect Legg to announce earnings that will miss investors’ and analysts’ expectations. We think that it is likely that during the conference call management could lower the company’s profit outlook going forward.

Analysts’ estimates have been coming down for the quarter, starting at $1.10 and now stand at the 13 cent consensus. Wall Street believes the money manager will see its earnings decline 90% for this quarter and anticipates 69% growth for the year. Unles LM’s subprime woes are over, The Correct Call believes that number is coming down.

Legg’s shares have risen almost 33% in 7 trading days. LM’s stock has a history of declining following their quarterly check-up; sometimes following a slight pop. With its big run-up, we see Legg as more of a short-term trading opportunity as we expect to see its share price move lower in the next few days.

Suggested Stop: $50.07