Citi says Lehman has ample liquidity

Lehman Brothers Holdings Inc has ample liquidity to run its
business and will generate positive earnings and grow book value per share this
year, said Citigroup analyst Prashant Bhatia, who upgraded the stock to
“buy” from “hold” on valuation.

“With $34 bln in liquidity at the parent company, the
ability to get access to over $200bln in liquidity from the Fed’s primary
dealer credit facility, and its ability to tap the term auction facility,
access to liquidity is a non-issue,” Bhatia wrote in a note to clients.

He has a price target of $65 on the stock, which was up nearly
7% Friday to $41.40 in trading before the bell. Shares of the fourth largest U.S. investment
bank closed at $38.71 Thursday on the New York Stock Exchange.

The analyst, who views current valuation of the stock as an
extremely attractive entry point for the stock, said he sees 70 % upside in
Lehman shares.

“The recent profitable quarter in a tough environment,
the coordinated actions taken by the Fed and Treasury to provide meaningful
liquidity, and Lehman’s management team’s excellent track record of creating
value and managing risk all serve as excellent downside protection,”
Bhatia said.

On March 18, Lehman posted better-than-expected
first-quarter results, helped by strong revenue in merger advisory and asset
management. The bank had also said it has more than enough capital to do
business in the current environment.