The Zacks Analyst Blog Highlights: United Parcel Service, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo

For Immediate Release

Chicago, IL – July 16, 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 United Parcel Service, Inc. (UPS-Free Report), JPMorgan Chase & Co. (JPM-Free Report), Bank of America Corp (BAC-Free Report), Citigroup Inc. (C) and Wells Fargo & Company (WFC-Free Report).

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Here are highlights from Monday’s Analyst Blog:

UPS Cuts EPS Outlook, Price Falls

Leading freight carrier, United Parcel Service, Inc. (UPS-Free Report) has slashed its earnings forecast for 2013 to $4.65 to $4.85 per share from $4.80 to $5.06. The current projection represents a year-over-year growth of 3% to 7%, lower than the previously estimated 6% to 12%. The company in its press release stated that the present macroeconomic conditions could hamper its growth and quarterly performance going forward.

The company’s latest revelation has led to a negative market sentiment, pushing stock prices 5.83% down on Friday trading over the previous day’s adjusted closing. UPS now expects second quarter earnings per share of $1.13, below the earnings of $1.15 in the corresponding quarter last year but up from $1.04 earned in the preceding quarter.

Previously, the company had already hinted that earnings per share growth would remain at low single digits for the second quarter due to operating margin pressure. Despite several profitability measures, the company is struggling to cope with the changing market scenario that resulted in customers shifting from premium products as they seek more cost effective logistic solutions.

Over the past year, the company has been registering lower demand from international business lanes, in particular from Asian routes. As a result, the company has been seeking several capacity adjustment measures to maintain parity with the changing demand environment. According to reports, UPS had undertaken restructuring worth $1.7 billion last year to adjust with the overcapacity issues in the freight forwarding market.

In Feb, UPS reported of expanding its Less Than Container Load (:LCL) services to additional networks in Asia, Europe, the Middle East, Africa, and South America, bringing its network to 17,000 direct LCL lanes serving 116 countries. The company’s expanding presence in the LCL space implies a shift from its airfreight business. This would ultimately benefit the cost structure and serve as an attractive opportunity to add customers in the present economy. Further, not only will UPS’ ocean business will get a boost from this move, shippers too can gain from cost savings against the expensive airfreight.

Foreclosure Activity Tumbles in 1H13

Indicating a rebound in the housing sector, the foreclosure market report – released by RealtyTrac – showed overall foreclosure activity in the first half of 2013 to be on a downward trend. As per this leading online marketplace of foreclosure properties, foreclosure filings plunged 23% year over year and 19% from the last 6 months, bringing the total number of properties receiving default, auction or repossession notices to 801,359.

For the first six months of 2013, 409,491 foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – were filed across the U.S. As per the report, foreclosure starts are expected to reach 800,000 by the end of this year, down from 1.1 million in 2012.

Meanwhile, an aggregate of 248,538 bank repossessions (REOs) occurred in the first six months of 2013. Given this pace, REOs are anticipated to reach 500,000 by the year-end, down from approximately 671,000 in 2012.

Nevertheless, foreclosure activity continues to remain a drag for many states. The top 5 states with the highest foreclosure rates in the first half of the year were Florida, Nevada, Illinois, Ohio and Georgia. Additionally, the procedure to complete the foreclosure of properties in the second quarter took an average of 526 days, up from 477 days in the previous quarter.

The drop in foreclosure activity is a result of the switching of mortgage servicers and the government to other options to prevent foreclosures. However, foreclosure activity is expected to remain volatile, as processes that are being used in handling these differ from state to state.

Foreclosure activity is expected to increase in the judicial states as the latter have substantial backlogs to clear. This is evident from Jun 2013 data, as judicial foreclosure auctions were scheduled for 28,296 properties, up 34% from Jun 2012 and nearly 1% from May 2013.

This increase demonstrates that delayed foreclosure cases in judicial states are now moving at a faster pace through foreclosure completion. Further, as the major servicers – JPMorgan Chase & Co. (JPM-Free Report), Bank of America Corp (BAC-Free Report), Citigroup Inc. (C), Ally Financial Inc. and Wells Fargo & Company (WFC-Free Report) – adjust to the new rules set under the National Mortgage Settlement as well as several other state laws, foreclosure activity is bound to rise in the near term.

However, stabilizing housing prices are likely to aid homeowners in avoiding foreclosures. Further, the rate at which properties are entering the foreclosure procedure is expected to gradually slacken, thereby raising housing prices going forward.

The housing market will get an opportunity to regain a strong foothold if there are sufficient buyers for these properties. Moreover, with the gradual recovery of the U.S. economy, reduction of unemployment, improving consumer confidence and a rise in demand for homes, property prices are poised to rise further in the future.

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