Cowen Group falls after KBW downgrades to ‘Market Perform,’ saying recovery will take time

Cowen Group shares slip following KBW downgrade

NEW YORK — Shares of Cowen Group Inc. slipped Monday after Keefe, Bruyette & Woods cut its rating on the investment brokerage, citing the difficulties it will have turning a profit in the uncertain economic environment.

THE SPARK: KBW downgraded the stock to “Market Perform” from “Outperform,” and revised its second-quarter estimate to a loss of 11 cents per share from a loss of a penny per share. The New York-based firm is slated to report second-quarter results in early August.

THE BIG PICTURE: Small and mid-cap brokerages have struggled in the past few months, with capital raising getting harder and less merger and acquisition activity than expected. Trading volumes have helped offset some of those negative factors, but concerns about Europe’s financial woes, the sudden market crash on May 6 and slower economic growth have made the market more volatile, wrote KBW analyst Lauren Smith in a note to clients.

THE ANALYSIS: KBW said weakness in the markets, high redemptions at hedge funds and the high costs associated with Cowen’s purchase of hedge fund Ramius late last year mean Cowen will likely take longer than originally expected for the company’s results to recover.

SHARE ACTION: Cowen shares fell 9 cents, or 2.2 percent, to $4.06 in midday trading.