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Doral Financial Corporation 01 July 2008

Company News Alert

Significant decline in common stock price since our last update report

NYSE BUY The Doral Financial Corporation (Doral) NYSE common stock has depreciated significantly since our
previous update report, reflecting investor concerns over the sensitivity of financial stocks to volatility
Common in global markets. However, we continue to expect the company’s restructuring initiatives to transform
it into a more conventional bank, which should drive top-line growth and lower its costs. As a result,
Stock this decline has created a buying opportunity in our view, and we therefore upgrade the NYSE
common stock from a HOLD to a BUY.
Ticker: DRL
Target price: US$17.14
Direct access to the full report free of charge at
Current price: US$13.54 http://www.iirgroup.com/researchoracle/viewreport/show/20151
Price change since We will reassess our NYSE common stock rating for Doral in our next full update report.
(26.1%)
last report:

European BUY We are likely to revert to a 6-24 month investment horizon for this stock in our next full update report,
as we now anticipate a significant positive currency impact on the European stock over the long term.
Stock1 Therefore, based on our fundamental outlook, we upgrade the European stock from a SELL to a BUY,
even though our current target price suggests a HOLD.
Ticker: DORL.F
Target price: €10.20
Current price: €9.45
Price change since
(17.8%) We will reassess our European stock rating for Doral in our next full update report.
last report:

Supervisor: Somnath Banerjee

Analyst: Vishal Ajmera Investment horizon - short term actionable trading strategies
Editor: James Smithies This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
Global Research Director: report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
Satish Betadpur, CFA short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.
Next news due:
2Q 08 results, August 2008
In our FY 2007 update report, dated 21 April 2008, we upgraded the Doral NYSE common stock from
a SELL to a HOLD on fundamental grounds, with a 6-12 month target price of US$17.14 and a
potential downside of 6%. The European stock was reiterated a SELL, with a 6-12 month target price of
€10.20 and a potential downside of approximately 11%. The NYSE common stock has declined 26.1%
since then, closing at US$13.54 on 30 June 2008. The decline in the stock price primarily reflects
investor concerns over the sensitivity of financial stocks to ongoing volatility in global markets. Doral is
primarily engaged in mortgage banking in Puerto Rico, which itself is tightly integrated with the US
market; therefore, the company is highly exposed to the ongoing credit crisis.

Although we remain concerned about financial market volatility and weakness in the Puerto Rican
economy, which is likely to constrain loan growth, our medium term outlook remains positive, based on
the company’s restructuring initiatives, which are intended to transform it into a more conventional
bank, as well as its strong 1Q 08 results. Therefore, in our view, the recent decline in the NYSE
common stock price has created an attractive investment opportunity and we upgrade it from a HOLD
to a BUY.

Footnotes
1 The DORL.F stock has had a low average daily trading volume of below US$1 mn over the last 12 months.

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