For Immediate Release
Chicago, IL - December 8, 2011 - Zacks Equity Research
highlights
VeriSign, Inc.
(
VRSN
) as the Bull of the Day and
France Telecom
(
FTE
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Citigroup Inc.
(
C
),
Bank of America Corp.
(
BAC
) and
UBS AG
(
UBS
).
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
:
VeriSign, Inc.
(
VRSN
) recently reported earnings of $0.35 per share in the third
quarter of 2011, beating the Zacks Consensus Estimate of $0.33. In
the past few years, VeriSign has considerably streamlined its
business to focus on providing, reliable and secure Internet
infrastructure services. The disposal of non-core businesses
boosted margins while the buyback of shares helped the bottom
line.
The company at present has a new management team. Additionally,
we think increased domain fees and ICANN's plan to increase the
number of generic domain names should positively impact its
results. Earnings estimates have increased recently.
Hence, we upgrade our recommendation to Outperform from Neutral.
We set a target price of $40.00, which is derived by applying a
target P/E multiple of 30.5x to our 2011 EPS estimate.
Bear of the Day
:
We are downgrading our recommendation to Underperform on
France Telecom
(
FTE
). The company reported lackluster results in the fist nine months
due to weak mobile device sales in France, higher VAT rates and
challenging economic conditions in Egypt and Cote d'Ivoire.
Although Conquests 2015, exiting of minority holdings, expanding
in emerging markets and cost-saving programs remain in place, we
believe persistently weak economic conditions, labor concerns,
lower mobile termination rates and unfavorable regulatory measures
across its key European markets might restrict the upside potential
of the stock.
France Telecom continues to invest in the deployment of mobile
broadband and fiber optic network in France, 2G and 3G roaming
facilities as well as expansion in emerging markets. We believe
these investments might increase the company's cost of operation,
resulting in lower profits.
Latest Posts on the Zacks
Analyst Blog
:
Citi to Layoff 4500, Incur Charges
Citigroup Inc.
(
C
) is cutting its workforce over the next few quarters as part of
its effort to increase efficiency by reducing costs in a
challenging operating environment. As a result, the company would
incur job cut related charges in the fourth quarter.
In an investor conference Citi's Chief Executive Vikram Pandit
said that the job cut will involve around 4,500 positions or less
than 2% of its total workforce. The elimination process will start
this quarter. The layoffs would result in the company incurring
$400 million charge in the fourth quarter.
Citi in fact has an efficiency goal of trimming 3% to 5% of its
expenses or about $2 billion each year. In the first three quarters
of 2011, the company has already achieved $1.4 billion in cost
savings.
Besides the job cut and its related charges, the Citi chief also
said that the company will likely incur an additional $500 million
in charges in the fourth quarter. Of this, $200 million stems from
accounting-related charges associated with its own debt and $300
million related to hedging losses resulting from tightening of
credit spreads. The $500 million charge is, however, subject to the
spreads at the end of the quarter. Yet, Citi will record $300
million from valuation adjustment due to the lowering of the
Japanese corporate tax rates.
With the job cut decision, Citi joins the bandwagon of other
biggies such as
Bank of America Corp.
(
BAC
) and
UBS AG
(
UBS
) who have opted for job cuts this year in the midst of economic
weakness, market uncertainties and tighter regulatory norms that
have restricted top-line growth. Hence, the focus is on pruning
cost to increase efficiency and remain competitive.
We believe that such a measure is a strategic fit for Citi in
this difficult economic environment and would help its profit
figure in the days ahead. Citi shares currently retain a Zacks #3
Rank, which translates into a short-term 'Hold' rating.
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 analysis from Zacks Equity Research about the latest news
and events impacting stocks and the financial markets.
About Zacks Equity Research
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Continuous analyst coverage is provided for a universe of 1,150
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which gives them keen insights to developments that affect company
profits and stock performance. Recommendations and target prices
are six-month time horizons.
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BANK OF AMER CP (
BAC
): Free Stock Analysis Report
CITIGROUP INC (
C
): Free Stock Analysis Report
FRANCE TELE-ADR (
FTE
): Free Stock Analysis Report
UBS AG (
UBS
): Free Stock Analysis Report
VERISIGN INC (
VRSN
): Free Stock Analysis Report
Zacks Investment
Research