CIBC World Markets is cutting its earnings estimates for brokerage house GMP Capital Corp., following the failure of the proposed merger between Iamgold Corp. and Wheaton River Minerals Ltd.

The firm said that it is cutting its earnings per share estimate for the firm to $1.44 from $1.49, based on the rejection of the deal. GMP was acting as Wheaton River’s financial advisor.

CIBC notes that while the Iamgold deal has been rejected, Wheaton may still engage in another transaction. There is a bid for the firm on the table from Coeur D’Alene Mines Corp. It says that GMP may yet see an M&A fee, if it is retained as Wheaton’s advisor. “However, we are not assuming this revenue now.”

The brokerage says that it previously added 8¢ to its EPS estimate in anticipation of the fees that GMP would earn on the closing of the deal. However, it is not cutting estimates as heavily as the upgrade because new issue activity and M&A action have both picked up in the meantime.

“The near-term earnings outlook for GMP remains choppy given the market concerns about oil price, impact of interest rate increments in the U.S. And geopolitical risks,” the firm says in the report. “However, the S&P/TSX has improved during the current quarter with a total return of about 3% since April 2004 after a weak performance in April/May 2004. Also, the outlook for the capital markets over the next two years remains positive.”

“We believe that a positive long-term outlook for the equity market will likely lead to an improving trend in equity issuance beyond the next one-to-two quarters,” it says, noting that current interest rate expectations will support a steady improvement in the capital-markets business too.

CIBC is maintaining its ‘Sector Outperformer’ rating on GMP. “We continue to expect the stock to remain choppy in the next two quarters but it will likely regain momentum after that, assuming the markets pick up,” it concludes.