The Zacks Analyst Blog Highlights: Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Bank of America, AvalonBay Communities and Equity Residential

Zacks

For Immediate Release

Chicago, IL – August 14, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the The Toronto-Dominion Bank (TD-Free Report), Canadian Imperial Bank of Commerce (CM-Free Report), Bank of America Corporation (BAC-Free Report), AvalonBay Communities Inc. (AVB-Free Report) and Equity Residential (EQR-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

TD Bank Confirms Deal with Aimia

The Toronto-Dominion Bank (TD-Free Report), Canada’s second largest bank, declared its entry into a 10-year definitive agreement with Aimia Inc. , wherein TD Bank would become the key issuer of credit cards for Aeroplan, a loyalty program owned by the latter. The deal will take effect on January 1, 2014.

As per the agreement, TD Bank would offer a full suite of co-branded Aeroplan Visa credit cards to its customers that would give them various options to earn air miles. Moreover, the customers would be able to enjoy other features and advantages of the Aeroplan program that includes the benefits from Aeroplan’s new Distinction recognition program – to be launched in January 2014. Under this program, customers would be able to select any of the enhanced premium and mid-market co-branded Aeroplan credit cards. Further, each plan would provide distinct benefits and earn rates.

Additionally, it is anticipated that the new co-branded credit cards would include credit cards for U.S. residents as well as credit cards for small business owners in Canada.

Earlier in June, TD Bank had announced that it would replace Canadian Imperial Bank of Commerce “CIBC” (CM
-Free Report) as the issuer of the Aerogold card. However, CIBC and Aimia failed to reach an agreement to extend their 22-year partnership.

CIBC proposes to sell 50% of its Aerogold portfolio to TD Bank and intends to retain those Aerogold credit card accounts held by its customers who have a broader banking relationship with the bank. Moreover, CIBC intends to issue Aerogold cards to these customers for a minimum period of 10 years.

CIBC intends to legally challenge TD Bank’s deal with Aimia if it fails to reach an agreement with TD Bank by August 26. As per CIBC, TD Bank’s deal with Aimia is invalid since it does not conform to Aimia’s obligations toward CIBC, under the current credit card agreement, expiring on December 31, 2013. The agreement between CIBC and Aimia invalidates the first refusal right of the former and its ability to match.

TD Bank has been constantly expanding its credit card business. Earlier, in 2011, it purchased the MBNA Canadian credit card business from Bank of America Corporation (BAC
-Free Report).

The TD Bank-Aimia deal is expected to be accretive to the top line of the former. Moreover, TD Bank anticipates the agreement to have a material impact on its 2015 earnings.  

TD Bank currently carries a Zacks Rank #3 (Hold).

AvalonBay Upgraded to Buy

On Aug 13, Zacks Investment Research upgraded AvalonBay Communities Inc. (AVB-Free Report) to a Zacks Rank #2 (Buy). This apartment real estate investment trust (:REIT) posted decent second-quarter 2013 results and raised its outlook for the year. We believe any short-term weakness in the price (the stock was down 1.01% during yesterday’s regular trading session) should be viewed as a good buying opportunity given its solid growth prospects in the multifamily apartment sector.

Why the Upgrade?

Aided by growth in rental revenue, AvalonBay reported core funds from operations (:FFO) of $1.62 per share in the second quarter of 2013 that was 20.9% ahead of the prior-year quarter figure. Improved results from its operating portfolio and leasing of new development communities have helped the company post encouraging quarterly results. Including non-routine items, FFO per share ascended 15.7% year over year to $1.55 from $1.34 in the prior-year period.

Total revenue during the reported quarter increased 49.0% year over year to $390.1 million and same store revenue and net operating income (:NOI) results have surpassed expectations. Therefore, prompted by decent multi-family operating fundamentals, the company raised its revenue, NOI and adjusted FFO growth outlook. This upward revision of the guidance also boosts investors’ confidence.

The company, which along with Equity Residential (EQR-Free Report) closed the Archstone acquisition in February, continues to aim for expansion in the high barrier-to-entry regions of the U.S. Moreover, its decent operating platform and prospects for growth in the multifamily sector keep us optimistic.

Following the solid performance and guidance hike analysts became more constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that remained flat at $6.19 for 2013 and rose 0.1% to $6.91 per share for 2014 in the past 7 days.

Additionally, the long-term earnings growth forecast for the company is 9.28%. Hence, the favorable estimate revisions, driven by positive second-quarter results and expansion efforts made way for the upgrade in the rank.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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