The Zacks Analyst Blog Highlights: Goldman Sachs, Citigroup, UBS, Morgan Stanley and General Mills

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Sep 07, 2012, 09:30 ET

CHICAGO, Sept. 7, 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 The Goldman Sachs Group Inc. (NYSE:GS), Citigroup Inc. (NYSE:C), UBS AG (NYSE:UBS), Morgan Stanley (NYSE:MS) and General Mills Inc. (NYSE:GIS).

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Here are highlights from Thursday's Analyst Blog:

Goldman, City, UBS Hauled to Court

IKB Deutsche Industriebank AG (IKB), a German lender, filed a lawsuit against The Goldman Sachs Group Inc. (NYSE:GS) and Citigroup Inc. (NYSE:C) for misrepresentation of documents while selling securities. Moreover, UBS AG (NYSE:UBS) was also sued by Sealink Funding Ltd.

The lodged complaint accuses Goldman, Citi and UBS of presenting misleading documents related to the sale of over $73.2 million, $137.4 million and $158.1 million, respectively, in residential mortgage-backed securities.

Claimants alleged that these companies issued misleading statements with omissions related to the mortgage-backed securities and concealed risks associated with these securities. Both IKB and Sealink claim that the documents used for offering the securities contained fraudulent statements or omissions regarding the risks associated with the investments. Misinterpretation of these risks led to the investments, which incurred losses at current levels.

Both IKB and Sealink have filed the lawsuits in the New York State Supreme Court in Manhattan and demand compensation for the damages. However, Goldman, Citi and UBS have refrained from commenting on the issue.

Moreover, troubles for Goldman seem to be unending, as only recently it was sued by another German lender-Bayerische Landesbank in the Supreme Court over the same issue for $511.9 in securities.

The array of lawsuits has continued for the U.S. banks since the financial meltdown. Last month, another Wall Street Biggie - Morgan Stanley (NYSE:MS) along with Goldman was sued by HSH Nordbank AG, a German lender related for the sale of over $524 million and $110 million, respectively, in residential mortgage-backed securities.

Numerous lawsuits alleging banks of such wrongdoings are expected to tarnish their reputation and financials over time. However, the investors and other financial institutions bearing the brunt of these faulty practices are expected to be fairly compensated.

Shares of both Goldman and Citi currently retain a Zacks #3 Rank, which translates into a short-term Hold rating, while UBS retains a Zacks #4 Rank, which translates into a short-term Sell rating.

General Mills Retains 2013 Guidance

General Mills Inc. (NYSE:GIS) reaffirmed its sales and earnings guidance for fiscal 2013. The company continues to expect adjusted diluted earnings per share of about $2.65 for fiscal 2013, a penny lower than the Zacks Consensus estimate of $2.66.

Earnings are expected to decline year over year in the first quarter of fiscal 2013, and then grow in the remaining nine months. The Zacks Consensus Estimate for the first quarter is 62 cents, down a couple of cents from the 64 cents reported in the year-ago quarter and down 6 cents since the company reported its fiscal fourth quarter results.

General Mills had a good fourth quarter, with earnings of 60 cents per share beating the Zacks Consensus Estimate by 3.4%. Earnings also topped the year-ago results by 15% driven by good top-line growth and cost savings despite significant rise in input cost.

Total revenue of the global consumer food company increased 12% year over year to $4.07 billion benefiting mainly from the addition of Yoplait entities, which were acquired in July last year.

The company expects to post mid-single digit growth in net sales in fiscal 2013 due to the recent acquisitions of Yoplait International, Parampara in India and Food Should Taste Good in the United States.

Gross margins are expected to improve modestly from 2012 levels. Operating profits are expected to grow slightly faster than sales in a mid-single digit range as cost savings and mix management offset commodity cost inflation.

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