Zacks Bull and Bear of the Day Highlights: SLM Corporation, Lender Processing
Services, Wells Fargo & Co., Bank of Ireland and Allied Irish Banks Plc.
CHICAGO, Aug 12, 2011
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
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
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
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
About the Analyst Blog
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the financial markets.
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