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The Zacks Analyst Blog Highlights: Walmart Stores, Bank of America, Target, Costco Wholesale and Wells Fargo - Press Releases

For Immediate Release

Chicago, IL - December 7, 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 Walmart Stores ( WMT ), Bank of America Corporation ( BAC ), Target Corp. ( TGT ), Costco Wholesale Corporation ( COST ) and Wells Fargo & Co. ( WFC ).

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Here are highlights from Tuesday's Analyst Blog:

Walmart Settles Lawsuit

Walmart Stores ( WMT ) settled a long-running class-action lawsuit alleging that the retail giant had breached the retirement benefits of its 2 million past and present workers.

Merrill Lynch, a unit of Bank of America Corporation ( BAC ), was also involved in the lawsuit as it acted as retirement plan administrator to the world's largest private employer, Walmart.

The duo agreed to pay a total of $13.5 million to settle the matter, and also agreed to remove mutual funds that charge high fees and provide more financial education to employees.

However, Walmart employees need to hold on before cheering the news as they would not get the $13.5 million directly. The settlement amount will be used in reducing the future 401(k) plan fees. As for the lawyers, they would get to enjoy $4 million of the settlement amount.

Braden, a Walmart employee in Highlandville, filed a case in 2009 against Walmart. The employee alleged that the retail giant invested in only 10 of the 8,000 mutual funds, for the 1.2 million participants of what is the world's most populous 401(k) plan. They included two low-cost equity index funds and just one bond fund. Moreover, the funds were mostly at everyday retail prices.

A 401(k) is a type of retirement savings account in the United States. The 401(k)s were first widely adopted as retirement plans for American workers in 1980. The 401(k) emerged as an alternative to the traditional retirement pension, which was paid by employers.

Employer contributions with the 401(k) can vary, but in general the 401(k) had the effect of shifting the burden for retirement savings to workers themselves. In 2011, about 60% of American households nearing retirement age have 401(k)-type accounts.

The plaintiff also alleged that the giant investment firm, Merrill Lynch received undisclosed "kickback payments" from outside mutual fund companies simply for allowing them to be in the plan.

Moreover, as per the plaintiff, no changes to the plan investments were made despite the fact that most of them underperformed the market indexes they were designed to track.

Wal-Mart reported better-than-expected second-quarter 2012 results on November 15, with quarterly earnings of $1.09 a share, up 12.4% over the year-ago earnings of 97 cents a share. Reported earnings per share also surpassed the Zacks Consensus Estimate by a penny.

However, Wal-Mart faces stiff competition from Target Corp. ( TGT ) and Costco Wholesale Corporation ( COST ), and has a Zacks #3 Rank, indicating a short-term Hold recommendation.

Claims Cost Wells Fargo Another $75M

Wells Fargo & Co. ( WFC ) has hit the headlines again and this time for a wrong reason. The company intends to pay $75 million to settle claims with stockholders in a class-action lawsuit alleging Wachovia for misleading investors, according to a Reuters report. For similar allegations, the company had reached a $590 million settlement with bond investors back in August.

The class-action case that included plaintiffs such as the New York City pension funds accused Wachovia for misleading investors about the quality of its mortgages from 2006 to 2008.

According to them, the underwriting practices in its $120 billion "Pick-A-Payment" loan portfolio were misrepresented by the executives at Wachovia to support the bank's stock price artificially.

Borrowers were allowed to make a minimum payment in these adjustable-rate mortgages. However, the minimum payment amount did not include all the interest and principal payable and that eventually raised borrowers' balance.

These loans were inherited by Wachovia when it purchased California-based Golden West Financial Corp in 2006. Following the acquisition, Wachovia continued to make them and carried on doing so even when the housing market began to deteriorate.

Wachovia in turn, started reporting losses that took a toll on its financial condition and was finally acquired by Wells Fargo in 2008. However, Wells Fargo itself does not make Pick-a-Payment loans.

According to Wells Fargo, the company had provisions for such a settlement in the prior quarters and therefore its financials won't be affected much. The $75 million settlement with stockholders is subject to the Court's approval.

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BANK OF AMER CP ( BAC ): Free Stock Analysis Report

COSTCO WHOLE CP ( COST ): Free Stock Analysis Report

TARGET CORP ( TGT ): Free Stock Analysis Report

WELLS FARGO-NEW ( WFC ): Free Stock Analysis Report

WAL-MART STORES ( WMT ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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