UPDATE 2-Lehman shares fall as brokerages cut estimates

(Adds Merrill comments)

May 21 (Reuters) - Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) shares fell nearly 6 percent on Wednesday after brokerages Credit Suisse and Merrill Lynch both slashed their second-quarter forecasts for the investment bank.

Credit Suisse forecast a second-quarter loss for the brokerage, citing weakness in fixed income, while Merrill forecast a small profit.

Credit Suisse analyst Susan Katzke, blaming incremental markdowns against residential and commercial real estate exposures, said she now expects a quarterly net loss of 60 cents a share for Lehman compared with a prior profit expectation of 67 cents a share.

Merrill Lynch cut its profit estimates on Lehman to 6 cents a share from 82 cents, saying the Wall Street consensus of 81 cents "seems far too high."

Katzke wrote: "Confidence is clearly undermined by the anticipated second-quarter loss and the need for incremental marks against still large real estate exposures."

Katzke rated Lehman shares as "outperform" based on valuation and prospects for improving performance.

Credit Suisse cut its 2008 profit estimate to $2.75 a share from $4.50 a share, and its price target range to $55 to $60 from a range of $60 to $65.

Merrill cut its full-year view to $2.80 a share from $3.88.

Lehman shares fell $2.44 to close at $39.56 on the New York Stock Exchange. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Amitha Rajan and Braden Reddall)