For Immediate Release
Chicago, IL - November 30, 2011 - 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
Discover Financial Services
(
DFS
),
Tree.com, Inc.
(
TREE
),
MasterCard Incorporated
(
MA
),
Visa Inc.
(
V
) and
Anadarko Petroleum Corporation
(
APC
).
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 Tuesday's Analyst Blog:
Discover Downgraded to Neutral
We have downgraded our recommendation on
Discover Financial Services
(
DFS
) to Neutral based on a weak momentum in the earnings outlook. The
company reported third-quarter 2011 earnings per share of $1.18,
significantly ahead of both the Zacks Consensus Estimate of 91
cents and 47 cents recorded in the year-ago quarter.
Discover's credit card sales volume has been witnessing modest
improvement owing to improved consumer spending and credit quality
trends. In the first nine months of 2011, card sales volume climbed
8% year over year to reach $75.1 billion.
Improved credit trends have helped in substantial release of
credit loss reserves, a part of which has been reinvested for
operational growth. Recently, the company has been focusing on
increasing its card acceptance through various alliances.
The agreement with Banco Popular de Puerto Rico commercial bank
is likely to expand Discover card acceptance through millions of
card members and billions in spending on the Discover and Diners
Club International networks. The deal with WorldPay is also
expected to augment the acceptance of Discover and Diners Club
cards, while the agreement with NETS Inc. will not only increase
the usage of the PULSE network for PIN debit transactions, but also
substantially increase the acceptances of Discover's PULSE, Diners
Club and Discover Cards in the U.S.
Additionally, Discover continues to explore healthy
opportunities for inorganic growth as well. The Student Loan Corp.
(SLC) acquisition comes in line with the company's long-term goal
of bolstering its private student loan portfolio, which has grown
steadily over the past three years when many others had to
discontinue the business altogether. Furthermore, the agreement to
acquire Home Loan Center, a subsidiary of
Tree.com, Inc.
(
TREE
), has added a residential mortgage component to Discover's
direct-to-consumer banking business.
Discover has also implemented several capital bolstering
initiatives, including equity and debt offering, which have
supported the company in achieving a strong capital base. Besides,
the proficient cost containment measures have aided substantial
reduction in loan loss provisions, improvement in delinquency and
net charge-off rates and moderation in interest expenses, thereby
prompting significant enhancement in bottom-line growth over the
past several quarters. In fact, in the third quarter of 2011,
Discover's credit card delinquency rate hit the lowest in 25 years
and the charge-off rate fell below 4% for the first time since
2007.
However, Discover's competitors in the credit card business such
as
MasterCard Incorporated
(
MA
) and
Visa Inc.
(
V
) have substantially larger scales of operation than the company,
thereby posing ample risk on the operational front. Not only do the
arch-rivals have relatively stronger global presence and brand
names, but they also own exclusive contracts with many financial
institutions, thereby limiting Discover's business opportunities
with such institutions.
Moreover, we expect continued adverse impact of the
implementation of CARD Act provisions along with an anticipated
increase in the volume of promotional rate offers to unfavorably
impact credit card yield in 2011, although we believe that it will
be partially offset by continued improvement in interest
charge-offs. A decline in credit card yield, together with the
addition of lower rate student loans from the acquisition of SLC
would lead to a further reduction in the net interest margin.
Moreover, Discover incurs considerable expenses in order to
compete with other credit card issuers to attract and retain
customers and increase card usage. Discover's profits are largely
tapered due to the company's higher-than-expected advertising and
marketing expenditures.
Besides, employee compensation and benefits expenses are showing
an increasing trend, on the back of the SLC acquisition and
staff additions. Additionally, in June 2011, the company agreed to
settle eight class-action lawsuits related to its marketing
policies, which is likely to considerably add to expenses, although
the settlement is yet to be approved by the court.
The Zacks Consensus Estimate for Discover's fourth-quarter 2011
earnings is currently 90 cents per share, up about 40% year over
year. For full year 2011, the Zacks Consensus Estimate stands at
$4.02 per share, up by a substantial 230% from 2010.
The company currently carries a Zacks #3 Rank, which translates
into a short-term Hold rating.
More Nat Gas for Anadarko
Independent oil and gas producer
Anadarko Petroleum Corporation
's (
APC
) latest discovery off the coast of Mozambique has substantially
raised the total reserve of natural gas in the field located in the
Offshore Area 1 of Mozambique's Rovuma Basin at the Lagosta
prospect.
Initial finding from this field, a year ago, suggested an
estimated reserve of about 6 trillion cubic feet (Tcf) of natural
gas but the new find has lifted the estimated recoverable resource
to a range of 15-30 Tcf of natural gas, with total estimated
reserve at 30-50 Tcf of natural gas.
The exploration well Barquentine-3, drilled at a total depth of
approximately 13,400 feet, (4,084 meters), encountered about 5,170
feet (1,575 meters) of water. The partnership is mobilizing new
drilliship in the area to spur exploration activity.
Anadarko is working jointly with five other players in the
Offshore Area 1 of Mozambique and has a 36.5% working interest.
Other players have working interest in the field ranging from 8.5%
(Cove Energy Mozambique Rovuma Offshore Ltd.) to 20% (Mitsui
E&P Mozambique Area 1, Limited).
Global demand for natural gas is on the rise due to its clean
burning nature and the company is working to capitalize on this new
wave. This new find will come into commercial operation from 2018
and the company has plans to send the same to meet energy demand
from China and Japan.
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
About Zacks
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:
http://twitter.com/zacksresearch
Join us on Facebook:
http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
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.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
ANADARKO PETROL (
APC
): Free Stock Analysis Report
DISCOVER FIN SV (
DFS
): Free Stock Analysis Report
MASTERCARD INC (
MA
): Free Stock Analysis Report
TREE.COM INC (
TREE
): Free Stock Analysis Report
VISA INC-A (
V
): Free Stock Analysis Report
Zacks Investment
Research