Investment Bank Seen Seeking Help of Outside Investor

June 5, 2008 6:56:15 AM PDT
Lehman Brothers Holdings shares recovered Wednesday after reports the nation's fourth-largest investment bank may raise capital from an outside investor. At issue are market fears of a cash crunch. Lehman shares rose 2.6 percent, after having dropped more than 15 percent on Tuesday. Investors regained confidence in Lehman after Standard & Poor's maintained its rating on the firm, and Merrill Lynch gave it a "buy" rating.

A Merrill Lynch analyst said speculation about Lehman's liquidity "are not justified." He also doesn't believe Lehman faces the same kind of path as Bear Stearns, which nearly collapsed when customers fled on fears it didn't have enough free cash to stay in business.

A financial sector analyst for Standard & Poor's said he believes the stock will continue to recover and maintained a $38 price target on it. He doesn't believe Lehman is facing a liquidity crisis, but feels a capital infusion might help assuage investors.