WaMu may avoid more capital raise: Bove

(Reuters) - Washington Mutual Inc (WM.N) may be able to withstand estimated losses of $36 billion and remain in business, and avoid an additional capital raise, said Ladenburg Thalmann analyst Richard Bove, who narrowed his 2008 loss forecast for the thrift.

The largest U.S. savings and loan on Tuesday said its shareholders approved two proposals at a special shareholder meeting that are related to the company's recent $7 billion cash infusion.

Bove said the $7 billion in new funds added to the $3 billion raised in December could cover an estimated $15 billion in pretax losses.

In addition, Washington Mutual has $4 billion in reserves so that from these sources the thrift can cover $19 billion in future estimated losses, he said.

Washington Mutual's pretax, pre-provision earnings over the next three years plus the amount it has on hand at the moment may help it withstand losses of $36 billion and remain in business, Bove said.

Washington Mutual has been one of the hardest hit by losses related to subprime mortgages and other loans.

He said the total estimated losses for the company may be $23.5 billion in the next three years or well below the estimated $36 billion available to cover those losses.

"Net result, the company survives to fight and hopefully win in the next mortgage cycle," he said.

Bove cut his price target on Washington Mutual shares to $5.50 from $10, but maintained his "neutral" rating.

He narrowed his 2008 estimate for the company to a loss of $3.03 per share, compared with his earlier estimate of a loss of $3.61 per share.

For 2009, he now expects a loss of 35 cents a share, compared with his earlier view of a profit of 2 cents a share. He cut his 2010 profit estimate to 20 cents per share from the previous $1.06.

Shares of Seattle-based Washington Mutual closed down 2.7 percent at $5.80 Tuesday on the New York Stock Exchange. They have fallen more than 85 percent from their 52-week high of $44.04 on June 28, 2007.

(Reporting by Dilipp S. Nag in Bangalore; Editing by Vinu Pilakkott)