The outlook for the fund industry has slipped in recent months, according to analysts at Merrill Lynch. The wirehouse sliced its earnings estimates for the fund industry on Monday, cutting its expectations at seven of the eleven fund firms it tracks.

Guy Moszkowski, a Merrill Lynch analyst tracking the fund industry cut his outlook for the seven firms in a report sent to clients this week. However, the cuts were not steep enough to change Moszkowski's target prices for the stocks.

Among the fund companies for which he cut his earnings expectations were: T. Rowe Price Group (TROW), Alliance Capital Management Holding (AC), Waddell & Reed (WDR), Federated Investors (FII), Gabelli Asset Management (GBL) Janus Capital Group (JNS) and Legg Mason (LM).

Left unchanged were his estimates for Franklin Resources (BEN), BlackRock (BLK), Eaton Vance (EV) and W.P. Stewart (WPL).

Moszkowski expects the 11 fund companies to see their earnings fall 1.7 percent for the third quarter because of falling asset values. Earlier, he had predicted a gain of 1.9 percent gain. He based the changed outlooks on the firms' latest assets under management numbers.

Janus and Legg Mason have seen their assets under management dip the most. Moszkowski sliced his estimates for full year earnings at Janus to 61 cents per share from 65 cents per share before. He expects the Denver-based fund firm to earn 13 cents for the quarter as opposed to 14 cents. For 2005, he now expects Janus to earn just 58 cents per share rather than the 67 cents he had been predicting.

Meanwhile, he cut his 2005 forecast for Legg Mason dropped to $4.78 a share from $4.95. In Legg Mason's case, he is also predicting a slowdown in brokerage revenues. He also cut his 2005 projection for T. Rowe Price to $2.85 a share from $2.90. He expects that Baltimore-based firm to earn 63 cents for the quarter.  

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