The Wall Street brokerage hosted an investor conference Thursday in which the company hinted at stabilizing financial markets, which sank into a deep freeze this summer amid deteriorating credit quality.

Bear Stearns executives said most of the company's businesses are beginning to rebound and the shape of the new market will benefit the investment bank in some ways.

However, analyst Meredith Whitney said a smaller market with fewer business opportunities will squelch various revenue sources. Mortgage lenders are shifting mainly to issuing loans they can sell to government-sponsored agencies, leading to at least a 30 percent decline in the issuance of mortgage loans, she said.

Mortgages have been a principal breadwinner for Bear Stearns, which issues home loans and buys mortgage debt from other lenders in order to repackage it into bonds.

Bear Stearns will not be able to slash expenses commensurate with this loss of revenue, she said, which will squeeze profit.

As the least internationally diversified of the investment banks, Bear Stearns needs to keep investing to build its business overseas, Whitney said. That means the bank does not have the flexibility to curb expenses.

She rates Bear Stearns "Sector Performer."

Shares of Bear Stearns fell slightly Thursday to close at $127.61, down 21.6 percent for the year.