CHICAGO, Aug 12, 2011 /PRNewswire/ -- Zacks Equity
Research highlights SLM Corporation (NYSE: SLM) as the Bull
of the Day and Lender Processing Services (NYSE: LPS) as the
Bear of the Day. In addition, Zacks Equity Research provides
analysis Wells Fargo &
Co. (NYSE: WFC), Bank of Ireland (NYSE: IRE) and Allied Irish
Banks Plc. (NYSE: AIB).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Full analysis of all these stocks is available at
http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
We are upgrading our recommendation on SLM Corporation
(NYSE: SLM) to Outperform. Its second quarter 2011 core earnings
beat the Zacks Consensus Estimate, on the back of an increase in
student loan originations, improved credit quality as well as a
decline in operating expenses. We believe that the company's
leading position in the student lending market, its cost
curtailment initiatives and the federal student loan assets
acquisition augur well.
We believe that SLM's diversifying efforts, coupled with an
economic recovery -- though at a sluggish pace -- will bolster its
earnings by expanding its private education loan business and
reducing its loan loss provision expenses. Capital deployment
efforts also boost investors' confidence in the stock.
Our six-month target price of $16.00 equates with 8.7x our earnings estimate
for 2011. Combined with a quarterly dividend of $0.10 per share, this target price implies an
expected total return of about 23.9% over that period. This is
consistent with our Outperform recommendation on the shares.
Bear of the Day:
Lender Processing Services' (NYSE: LPS) second-quarter
2011 results were a mixed bag. Although Lender Processing surpassed
the Zacks Consensus Estimate, growth slowed year over year. We are
concerned about the high debt on its balance sheet as well as
challenging origination and default market. There is a possibility
of further foreclosure delays.
Moreover, the company is anticipating near-term challenges on
account of significant changes in the origination volumes. Hence,
we maintain our Underperform recommendation on the shares.
Our six-month target price of $15.00 equates to about 6.3x our estimate for
2011. The target price implies an expected total negative return of
10.6% over that period.
Latest Posts on the Zacks Analyst Blog:
Wells Fargo Buys $1.4B
Portfolio
Wells Fargo & Co.
(NYSE: WFC) is said to have won a bid for a $1.4 billion U.S. commercial real estate loan
portfolio of the Bank of Ireland (NYSE: IRE), according to a Wall
Street Journal report.
The portfolio consists of 25 loans, performing in nature and
mainly backed by commercial real estate in New York, Boston and Washington. The loans were sold near their
face value. The portfolio sale is a part of Bank of Ireland's deleveraging efforts.
In May, Wells Fargo also struck a deal in partnership with
Blackstone Group LP to purchase around $1
billion in commercial mortgages from Allied Irish Banks
Plc. (NYSE: AIB).
Strategic acquisitions have been part of Wells Fargo's endeavor
to strengthen its business model, expand its capabilities and
diversify its footprint. These have been the driving force of
its growth in recent years. The Wachovia acquisition and the demise
of some smaller players helped it garner a larger share in the
mortgage market. With cross-selling as its key strength, Wells
Fargo's diverse geographic and business mix provides a solid
leverage for consistent earnings growth.
Capital ratios are strong, and dividend as well as share buyback
initiatives inspire investors' confidence in the stock. Yet, we
believe that a substantial improvement in revenue will remain
elusive. In addition, regulatory issues also pose as headwinds to
the company's top line.
Wells Fargo currently retains
its Zacks #3 Rank, which translates into a short-term Hold rating.
Also, considering the fundamentals, we are maintaining a long-term
Neutral recommendation on the stock.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two
stocks that are likely to outperform (Bull) or underperform (Bear)
the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides
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events impacting stocks and the financial markets.
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