The Zacks Analyst Blog Highlights: Fifth Third Bancorp, Vantiv, Procter & Gamble, Apache and BP plc

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Mar 29, 2012, 09:30 ET

CHICAGO, March 29, 2012 /PRNewswire/ -- 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 Fifth Third Bancorp (Nasdaq: FITB), Vantiv Inc. (NYSE: VNTV), Procter & Gamble Company (NYSE: PG), Apache Corporation (NYSE: APA) and BP plc (NYSE: BP).

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Here are highlights from Wednesday's Analyst Blog:

Fifth Third Sees More Vantiv Gains

Fifth Third Bancorp (Nasdaq: FITB) has revised its estimates of gain from Vantiv Inc.'s (NYSE: VNTV) initial public offering. The company now expects an additional pre-tax gain of $17 million in the first quarter of 2012 which is over and above the $95 million that the company had earlier projected.

U.S.-based Vantiv was formerly known as Fifth Third Processing Solutions (FTPS). FTPS is a payment processing company dealing with more than 12.9 billion payment transactions valued at $426 billion annually. Fifth Third had spun-off FTPS in 2009 after which a joint venture was initiated between Advent International and Fifth Third Bank, a subsidiary of Fifth Third. The company was named Vantiv in June 2011.

Notably, Vantiv Inc. opted for an initial public offering of Class A shares on the company. The offering was completed on March 21, 2012 and raised $500 million at an average price of $17 per share.

However, the underwriters for Vantiv fully exercised their option to purchase an additional 4,411,800 shares of Vantiv Inc. Class A common stock at the public offering price of $17.00 per share. Part of the proceeds was used by Vantiv to purchase 2,086,064 Class B units of Vantiv Holding LLC from Fifth Third. This will result in the cancellation of an equivalent number of shares of Class B common stock of Vantiv held by Fifth Third.

This action of purchase pursuant to the option will fetch Fifth Third around $17 million in pre-tax gain and approximately $11 million after-tax in the first quarter of 2012. Hence the total gain will stand at $112 million pre-tax and $71 million after-tax. Moreover, as a result of such actions Fifth Third's remaining economic interest will reduce to approximately 39% of Vantiv's future earnings.

Fifth Third continues to hold 83.9 million Class B units of Vantiv Holding LLC. These shares are exchangeable for Class A Common Stock of Vantiv Inc. on a one-for-one basis coupled with a warrant, which can be exercised and exchanged into Vantiv Inc. Class A Common Stock. These securities are dependent on certain conditions and restrictions.

P&G Goes Philanthropic

The world's leading consumer goods chainProcter & Gamble Company (NYSE: PG) and humanitarian organization CARE have decided to provide more than 100 million liters of clean drinking water in Kenya and Ethiopia. The retail giant is set to pump more than $1 million for the project.

The initiative is a part of P&G's Children's Safe Drinking Water (CSDW) Program, under which the Cincinnati-based consumer goods manufacturer has been offering its P&G Purifier Water packets in developing nations for the past seven years. These water packets contain a patented powdered technology that helps purify drinking water.

CSDW is a non-profit initiative, which has also got recognition from U.S. Secretary of State, Hillary Clinton, who presented P&G with the Award for Corporate Excellence for improving the lives of consumers in Nigeria and Pakistan. The initiative has been successful in supplying more than four billion liters of clean drinking water to people in need since 2004.

CSDW joined hands with varied networks and distributed water purifiers in the developing countries.

P&G and CARE recently celebrated their success of converting Kenya's 100^th school a healthy school, where students purify their drinking water and also take the technology to their home. Thus, the program supplies over 17,000 liters of clean drinking water to 350,000 people each day to students and their families in Kenya.

The initiative has been successful in reducing school absenteeism by more than 25%, and resulted in nearly a 3-fold increase in household water treatment.

Apache's Egypt Drilling Success

Following the approval of seven new development leases in the Faghur Basin, Apache Corporation (NYSE: APA) has further boosted its production in Egypt's Western Desert.

Apache currently drills approximately 203,000 barrels of oil and produces 880 million cubic feet (mmcf) of gas per day in Egypt, about 3% higher than the 2011 level. With the addition of the new leases, the company's production increased by 5,200 barrels per day in the oil play.

Per the terms of production-sharing agreements with the government, Apache is entitled to receive a net production of about half of the gross output.

Over the past few months, Apache achieved a number of successes in the Faghur Basin with the exploration of West Kalabsha South-1X and WKAL-N-1X wells. Year to date, the company has drilled 8 development wells in the region and targets to spud 14 more during the year. Currently, the company is drilling 3 wells in the region.

The latest well – Neilos-2 – drilled to evaluate the north flank of the Neilos Field and is estimated to hold 33 feet of net pay in the Jurassic Safa reservoir. The well's daily production capacity is expected to be about 6,301 barrels of oil and 4.2 mmcf of gas.

Apache stated that it is acquiring and evaluating 3-D seismic surveys in the 10 million acres in the Western Desert in an attempt to improve the drilling inventory. The company has completed two such surveys in the Faghur Basin in order to identify exploration prospects across the Sallum and Shushan concessions.

We believe that Apache's discovery of new Faghur fields over the past few months is mostly attributed to the company's sound regional understanding coupled with efficient and knowledgeable personnel.

Earlier in 2010, a subsidiary of Apache paid $650 million to BP plc (NYSE: BP) to acquire four development leases and one exploration concession in the Western Desert.

We believe that Apache is characterized by large geographically-diversified reserve base, successful drilling works and strong production growth outlook. The company also exhibits a strong financial position, which will enable it to capitalize on investment opportunities and pursue strategic acquisitions, thereby further improving growth visibility.

However, our optimistic view on the company is clouded by the unstable gas/oil prices, geopolitical risks associated with international operations and project costs overruns and delays.

Apache currently retains a Zacks #3 Rank (short-term Hold rating). We are also maintaining our long-term Neutral recommendation on the stock.

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