For Immediate Release
Chicago, IL – April 4, 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 Bank of America Corporation (BAC), HSBC Holdings plc (HBC), Wells Fargo & Company (WFC), JPMorgan Chase & Co. (JPM) and Companhia de Saneamento Basico do Estado de Sao Paulo, or SABESP (SBS).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Wednesday’s Analyst Blog:
BofA Settles Credit Unions’ Claims
In yet another resolution of claims related to the sale of risky mortgage based securities (:MBS), Bank of America Corporation (BAC) has agreed to pay $165 million to the U.S. regulator for credit unions – National Credit Union Administration (:NCUA). Yet, BofA neither accepted nor denied any wrong doing.
Countrywide Financial – acquired by BofA in 2008 – had sold risky MBS to five corporate credit unions, which led to their failure following the financial crisis. Since then, the regulator for credit unions has been trying to recover the losses.
Earlier in February, BofA revealed that it had reached an initial agreement with the credit union regulator to settle the claims, without disclosing the amount required to be paid. Also, the company had stated that no additional reserves will be required to settle the claims.
BofA is the fourth bank to settle credit union regulator’s claim. Earlier, the regulatory body had reached settlements with Deutsche Bank AG, HSBC Holdings plc (HBC) and Citigroup Inc. worth about $171 million. Apart from these, other global banks including Credit Suisse Group, Goldman Sachs Group Inc., Wells Fargo & Company (WFC), JPMorgan Chase & Co. (JPM) and Barclays PLC are facing lawsuits from the credit union regulator for similar charges.
For BofA, the settlement of the claim is a positive step towards resolving the issues pertaining to the sale of MBS. Over the past few months, the company has been trying hard to overcome the losses from its home loan business.
In Jan 2013, BofA announced nearly $14 billion worth of settlements to end its mortgage related problems. Further, in 2011, the company had reached an $8.5 billion settlement deal with the private investors who had brought those risky MBS.
We believe that the resolution of claims will go a long way to improve BofA’s overall efficiency. The company has been striving hard to regain its past glory. For this, it has announced several initiatives that have now started bearing fruits. All the initiatives will lead to enhanced financial performance going forward.
Currently, BofA retains a Zacks Rank #3 (Hold).
SABESP Upgraded to Outperform
We have recently upgraded Companhia de Saneamento Basico do Estado de Sao Paulo, or SABESP (SBS) from Neutral to an Outperform recommendation, anticipating its performance to be better than the broader market.
Why the Upgrade?
SABESP is a Brazil-based water and sewage service provider serving primarily the State of São Paulo. Long-term growth prospects seem bright as the company is progressing well to achieve a target of roughly 1.3 million new water connections and 1.7 million new sewage connections by 2019. Water and sewage connections in 2012 represented a year-over-year growth of 2.6% and 3.5%, respectively.
To improve its services, SABESP has allocated approximately R$9.9 billion to finance its capital investment plans for the 2013-2016 timeframe. Of the total, 26.2% is meant for spending in 2013, 26.5% in 2014, 24.4% in 2015 and the rest 23.0% for 2016. An amount equal to R$362 million has also been spent in 2012 on a Water Loss Reduction program.
SABESP also posted impressive financial results for the year 2012. Its earnings per share increased 56.2% year over year while revenue inched up 8.2% on the back of higher water supply, sewage collection and treatment, and construction revenue. Fall in cost of sales and services as a percentage of revenue helped push the company’s gross margin.
Solid growth prospects and near-term results have raised optimism for even better results for SABESP in the years ahead. The Zacks Consensus Estimate for 2013 now stands at $4.54 per ADR, up 8.9% from a prior estimate provided 30 days ago while estimate for 2014 has gone up 19.9% to US$5.18. Also, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +7.7% for 2013.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: https://twitter.com/zacksresearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com