The Zacks Analyst Blog Highlights: Twitter, First Horizon National, Freddie Mac, Fannie Mae and Barclays

01 May, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, May 1, 2014 /PRNewswire/ -- 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 the Twitter (NYSE: TWTR-Free Report), First Horizon National Corporation (NYSE: FHN-Free Report), Freddie Mac (OTCBB:FMCC-Free Report), Fannie Mae (OTCBB:FNMA-Free Report) andBarclays PLC (NYSE: BCS-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Why You Should Be Worried About Twitter's Mixed Earnings

News from Twitter's (NYSE: TWTR-Free Report) second earnings report as a public company has met with mixed results from investors. Sales doubled to $250.5 million year over year, more than Wall Street analysts expected. Twitter continues to lose money, incurring a 22 cent loss per share.

Despite the increase in ad sales, Twitter reported a reduction in engagement metrics. Twitter reported 255 million monthly active users for Q1 2014, a 5.8% increase over last quarter. This falls slightly below analysts' expectations. Wall Street analysts remained worried about Twitter's slow growth because such a large percentage of revenue comes from ad sales. On the earnings call Twitter CEO Dick Costolo was positive about engagement in Q1. Favorites and retweets were up 26% in the quarter. A sign, Costolo says, people are getting more use out of Twitter.

Even with the higher than expected sales revenue, Twitter investors have reason to worry. There is a growing concern among content producers that social engagement on Twitter is not as effective as they had thought. In January, announced they would no longer be using social engagement and page views to measure success. Tony Haile, the CEO of real time traffic tool ChartBeats, has said that they see no correlation between social engagement and web traffic.

First Horizon Closes FHFA Lawsuit for $110M

First Horizon National Corporation (NYSE: FHN-Free Report) ended the legal tussle it was embroiled in since 2011 with the Federal Housing Finance Agency (FHFA) – the conservator for Freddie Mac (OTCBB:FMCC-Free Report) and Fannie Mae (OTCBB:FNMA-Free Report). The company announced a lawsuit settlement for $110 million related to the sale of mortgage back securities to these government sponsored enterprises prior to the financial crisis.

First Horizon will pay $61.6 million to Fannie Mae and $48.4 million to Freddie Mac. Notably, the settlement will not lead to any adjustment in the first-quarter results that the company recently reported. Also, second-quarter results may not be impacted as the company claims to have sufficient reserve and some insurance for this settlement.

The Probe

Many financial institutions resorted to inappropriate, misleading, aggressive and fraudulent methods to boost their mortgage operations during the pre-crisis period that fueled the sub-prime mortgage crisis. Consequently, Freddie Mac and Fannie Mae reached the brink of bankruptcy and the government intervened to rescue these lenders.

In order to avoid such fatal scenarios in the future, the regulators started implementing stringent regulations and in 2011 the FHFA sued 18 financial organizations including First Horizon for selling faulty mortgage-backed securities to Freddie Mac and Fannie Mae that caused investors severe losses.

FHFA alleged that First Horizon have violated Federal and District of Columbia securities laws while it sold private-label mortgage-backed securities to Fannie Mae and Freddie Mac during the period before the financial crisis. Notably, in 2008, First Horizon exited from its national mortgage businesses.

In Conclusion

This marks the 14th settlement of the 18 PLS (private-label securities) lawsuits that FHFA filed in 2011. Recently, Barclays PLC (NYSE: BCS-Free Report) reached a settlement with the FHFA for $280 million owing to this PLS lawsuit. The FHFA continues to exhibit efforts in successfully resolving the issues and safeguarding the interest of investors.

The company currently carries a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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