The Zacks Analyst Blog Highlights: Goldman Sachs Group, Barclays, Credit Suisse Group, Charles Schwab and Roche

News provided by

May 13, 2014, 09:30 ET

CHICAGO, May 13, 2014 /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 The Goldman Sachs Group, Inc. (NYSE:GS-Free Report), Barclays PLC (NYSE:BCS-Free Report), Credit Suisse Group AG (NYSE:CS-Free Report), The Charles Schwab Corporation (NYSE:SCHW-Free Report) andRoche (OTC:RHHBY-Free Report).

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

Here are highlights from Monday's Analyst Blog:

Goldman (GS) at Risk from High-Speed Trading?

Adding to growing concerns related to high-speed trading, The Goldman Sachs Group, Inc. (NYSE:GS-Free Report) revealed in its latest quarterly filing that the company is facing investigations regarding the practice. The company stands among several other defendants including high-frequency trading firms, securities exchanges and broker-dealers in a putative class action filed on Apr 18, 2014 in the U.S. District Court for the Southern District of New York.

The Charge

The class action has been brought on behalf of public investors who traded in the U.S stock market on a registered public stock exchange or on a U.S. based alternative trading platform since Apr 18, 2009.

The class action alleges that the securities exchanges together with the brokerage firms and the high-frequency trading firms resorted to inappropriate methods while carrying out business transactions. Further, they are accused of sharing non-public information with certain market players who capitalized on such information, causing manipulation in stock prices. Precisely, the defendants are alleged to have violated the federal securities laws related to market manipulation and insider trading.

Such fraudulent activities amounted to market rigging. Consequently, the plaintiffs traded at artificial manipulative prices instead of true and actual prices.

The defendants include exchanges like NYSE and NASDAQ, while Barclays PLC (NYSE:BCS-Free Report), Credit Suisse Group AG (NYSE:CS-Free Report) and The Charles Schwab Corporation (NYSE:SCHW-Free Report) were among other alleged companies.

High Frequency Trading: What's the Buzz?

With the advent of technology, trading has become much faster and easier. As a result, electronic trading is currently dominating the market.

With speed and algorithms, the high speed traders buy and sell securities within fraction of seconds, some times measured in microseconds, or millionths of a second. The main objective is to gain profit from the smallest price changes. This trading are not meant for the general public, rather these are carried on by high-frequency trading firms that use supercomputers specially designed for similar transactions. These firms get direct access to exchanges through their brokers' accounts - referred to as "naked access".

However, in 2010, high-frequency trading was held responsible for wiping out hundreds of billions of dollars of market value in a "flash crash."

Following the release of Flash Boys: A Wall Street Revolt by Michael Lewis, that focused on the role of high frequency trading firms rigging the US stock market, the U.S. Federal Bureau of Investigation (FBI) and the U.S Justice Department (DOJ) announced investigations into high frequency trades for possible violations of the law. Also New York Attorney General Eric Schneiderman and the SEC and are undertaking similar investigation.

Where Goldman Stands

The class action mentioned that Goldman's brokerage division traded on behalf of the plaintiffs during the aforementioned period on stock exchanges and alternate trading venues. It also hinted at Goldman's own trading operations engaged in high frequency trading that once garnered about 10% of the company's total revenue.

Further, the class action mentioned that during the said period Goldman realized profits from defendants like NASDAQ and NYSE owing to transactions through its own trading venues including Sigma X. Sigma X at present stands as one of the largest dark pools in the market.

Dark pools are private platforms wherein the secrecy of investors is guarded well in comparison to public exchanges. Notably, many dark pools offer access to their trade data to outsiders including high frequency trading firms. With increasing competition in the dark pool industry, the technical faults and issues have heightened the associated risks and raised concerns over the relationship that the high frequency firms and the dark pools share.

According to a report in The Wall Street Journal last month, Goldman was contemplating the closure of Sigma X. However, there has been no official revelation to date.

Bottom Line

Undoubtedly, any negative outcome of the investigations will force Goldman to stop such trading practices, which may result in lower trading revenues. In fact, it could be high enough to mar the total revenue. However, nothing can be certainly said until the extent of Goldman's involvement in high-frequency trading is known.

Pipeline Products at Roche

Pipeline updates are highly awaited events in the pharma/biotech sector as they play an important role in deciding whether or not to invest in a particular company. These updates provide information on experimental drugs and at times give an insight into the commercial potential of the candidate once it is successfully developed and commercialized.

Roche (OTC:RHHBY-Free Report) recently announced positive new data on candidate cobimetinib (GDC-0973) from the phase Ib BRIM7 study at the 10th European Association of Dermato Oncology (EADO) Congress.

The BRIM7 study was an open label, dose-finding and dose expansion study which evaluated the safety and tolerability of cobimetinib in combination with Zelboraf among patients suffering from advanced BRAFV600 mutation-positive metastatic melanoma. The primary endpoint of the study was to evaluate the safety and tolerability of the combination. Roche also expects to identify the optimal dosing schedule for use in further clinical studies. The results from the study showed promising anti-tumour activity for the combination.

We note that Roche is currently conducting a phase III study (coBRIM; GO28141) to evaluate the efficacy and tolerability of the cobimetinib and Zelboraf combination as compared to only Zelboraf in patients with previously untreated BRAFV600 mutation-positive, unresectable locally advanced or metastatic melanoma. Roche expects primary results from the coBRIM study later in 2014.

We remind investors that Zelboraf, a BRAFV600-targeted therapy, is approved for the treatment of adult patients with BRAFV600 mutation-positive unresectable or metastatic melanoma in more than 80 countries. The drug was launched in 2011.

Sales from Zelboraf came in at CHF 79 million in the first quarter of 2014, down 2% due to competition in the U.S. The successful development and commercialization of cobimetinib will further boost sales.

Roche currently carries a Zacks Rank #3 (Hold).

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

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on GS - FREE

Get the full Report on BCS - FREE

Get the full Report on CS - FREE

Get the full Report on SCHW - FREE

Get the full Report on RHHBY - FREE

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.