For Immediate Release
Chicago, IL – May 2, 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 JPMorgan Chase & Co. (JPM), Citigroup, Inc. (C), Morgan Stanley (MS), The Goldman Sachs Group, Inc. (GS) and American Public Education, Inc. (APEI).
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:
Legal Tussle for JPMorgan & Citi
Washington Mutual Inc. – acquired by JPMorgan Chase & Co. (JPM) in 2008 – and Citigroup, Inc. (C) are encountering legal charges in connection with issues arising out of the sale of mortgage-backed securities (:MBS). Integer Program LLC sued these two firms for incurring huge losses from mortgage loans.
Integer has accused Washington Mutual and Citi of breaching an agreement related to mortgage loan purchase entered by these two institutions in 2007. As a result of this agreement, Integer incurred a total loss exceeding $301 million.
As per the lawsuit filed by Integer, residential mortgage loans, in excess of 4600, were securitized by Washington Mutual. Consequently, these mortgage-backed securities were sold to Integer. Of these, the alleged breaches took place on over 1,400 loans.
Prior to the closing of the offer date of the certificates to the public, more than 60 mortgage loans were delinquent. Further, it is alleged that both JPMorgan and Citi were well aware of the associated risks. However, despite being acquainted with the existing breaches in the securities, JPMorgan and Citi did not take any steps to rectify them.
Similar Charges Earlier
Earlier in 2013, JPMorgan was sued by National Credit Union Administration (:NCUA), the U.S. regulator for credit unions, for misrepresentation in the underwriting and sale of MBS worth over $2.2 billion, which were sold to the U.S. Central, Western Corporate and Southwest Corporate federal credit unions (FCUs) by Washington Mutual.
Further, many other global giants, including Morgan Stanley (MS) and The Goldman Sachs Group, Inc. (GS), are battling similar lawsuits related to MBS.
Such charges are expected to result in increased legal risks, which might pose a threat to the companies’ financials going forward. Moreover, it is apprehended that litigation overhangs might tarnish the image of these banking majors.
JPMorgan currently carries a Zacks Rank #2 (Buy), while Citi carries a Zacks Rank #3 (Hold).
APEI Downgraded to Neutral
We recently reverted back to a Neutral recommendation on American Public Education, Inc. (APEI) from Outperform due to weak new student starts in the fourth quarter of 2012. American Public Education carries a Zacks Rank #3 (Hold).
Why the Downgrade?
Even though, American Public beat the Zacks Consensus Estimate for revenues and earnings in the fourth quarter of 2012, its new student starts were weak and operating margins declined in the quarter. American Public, an online provider of higher education, released its fourth quarter of 2012 earnings results on Feb 28.
New student enrollments declined 8% in the quarter, higher than management’s expectations of a 3% to 7% decline. Management believes that the company’s fraud prevention initiatives are reducing enrollment of students who abuse funds, which explains the decline in new student starts for the quarter.
Moreover, the company also provided a bleak outlook for student starts in the upcoming quarter. We believe the declining trend of new student starts could eventually impact total enrollment in future quarters.
Operating margins also declined in the quarter by around 130 basis points to 25% due to the company’s increased marketing efforts, which resulted in higher selling and promotional expenses.
A tough regulatory environment also remains a persistent overhang.
Despite the fourth-quarter beat, estimates have mostly moved downwards for 2013 and 2014. The Zacks Consensus Estimate for 2013 moved down by 1.9% to $2.58 and 7.0% to $2.80 for 2014 over the last 60 days.
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