Out of the Gate: UBS news pressures Wachovia shares

NEW YORK—Wachovia Corp. shares fell in morning trading Tuesday on news of UBS's first-quarter loss and impending job cuts helped drag the market lower.

UBS AG, a Swiss bank, reported a loss of $10.97 billion in the quarter and said it will eliminate 7 percent of its work force, or 5,500 jobs. UBS shares lost $1.07, or 3.1 percent, to $33.24, and Wachovia stock sank 65 cents, or 2.2 percent, to $29.15.

Separately Tuesday, Stifel Nicolaus analyst Christopher Mutascio upgraded shares of Charlotte, N.C.-based Wachovia to "Buy" from "Hold," and set a price target of $40 per share.

Mutascio based his upgrade on the moves Wachovia has made to deal with its credit losses. On April 14, the company announced a stock sale of $7 billion, slashed its dividend to 37.5 cents from 64 cents, and set aside $2.8 billion to cover problem loans.

The news pressured the stock for a few days, but shares began to recover on April 18, after Wachovia said it raised $8.05 billion from the stock sale, above its goal of $7 billion. Shares are up 15.2 percent since that time.

Mutascio's price target implies the stock will climb 34.3 percent over the next year or so.