The Zacks Analyst Blog Highlights: Tesla Motors, Honda Motor, Fuji Heavy Industries, Ford Motor and Zions Bancorp.
CHICAGO, Dec. 18, 2013 /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 Tesla Motors, Inc. (Nasdaq:TSLA-Free Report), Honda Motor Co., Ltd. (NYSE:HMC-Free Report), Fuji Heavy Industries Ltd. (OTC:FUJHY-Free Report), Ford Motor Co. (NYSE:F-Free Report) and Zions Bancorp. (Nasdaq:ZION-Free Report).
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Here are highlights from Tuesday's Analyst Blog:
Tesla Unveils Chinese Website
Tesla Motors, Inc. (Nasdaq:TSLA-Free Report) has set its sights on capturing the world's largest automobile market: China. About a month after opening it first showroom in the nation, the electric car maker has launched its Chinese website, Tousule.cn.
Chinese consumers can book the Tesla Model S through the site by paying a reservation fee of RMB 250,000 ($41,000). Deliveries of the car in China are expected to begin in the first quarter of 2014.
Tesla is also offering reservations of Model X in China through the new website. Deliveries of the car are projected to start in the U.S. from 2014.
Tesla started reservations of Model S in China in Aug 2013. Last month, the company opened its first Chinese showroom at the exclusive Parkview Green mall in Beijing. The company also has a page on the Chinese microblogging platform Sina Weibo.
According to the China Daily, Tesla Model S will be priced in the range of $146,000–$200,000 in China, compared with $71,000–$120,000 in the U.S. and $98,000–$162,000 in Europe. This significant difference in pricing is the result of high taxes imposed on imported goods in China.
However, Tesla plans to offer various incentives to Chinese consumers to counter the steep pricing. The efficient safety features and environment friendly nature of Tesla's cars are expected to attract consumers in China. Some of the largest cities in the nation, such as Shanghai and Beijing, are very polluted and the Chinese government is trying to reduce sales of vehicles that emit greenhouses gases. Moreover, the country witnesses huge demand for luxury vehicles, which is expected to benefit Tesla.
However, the Chinese government is providing support to Chinese manufacturers like BYD and Kandi to build electric cars, which will provide competition to Tesla. Moreover, the nation does not have adequate charging infrastructure, which will affect the sale of electric cars.
Nevertheless, Tesla expects to sell about 5,000 cars per annum in Asia. Apart from China, the automaker recently opened the booking for Model S and Model X in Japan. However, sales in the continent can be much higher if the cars become popular in China.
Tesla estimates delivery of a little less than 6,000 Model S vehicles in the fourth quarter of 2013 and 21,500 vehicles globally in 2013. The automaker expects Model S sales to cross 40,000 by 2014, assuming the demand in Asia and Europe meet expectations.
Tesla currently has a Zacks Rank #4 (Sell). Better-ranked automobile stocks include Honda Motor Co., Ltd. (NYSE:HMC-Free Report), Fuji Heavy Industries Ltd. (OTC:FUJHY-Free Report) and Ford Motor Co. (NYSE:F-Free Report). All these stocks carry a Zacks Rank #2 (Buy).
Volcker Rule Weighs on Zions
Zions Bancorp. (Nasdaq:ZION-Free Report), which is one of the premier financial services companies in the U.S., is recently faced with the pressure of the revised Volcker Rule released last week. As per the rule, most of Zions' bank and insurance trust preferred collateralized debt obligation (CDO) securities and other asset-backed CDO securities come under the category of restricted investment and thus cannot be held until they mature.
Zions has to divest these disallowed investments by Jul 21, 2013. The deadline would be extended to Jul 21, 2017 if the bank fails to meet it.
Though Zions does not plan any immediate material divesture, it intends to convert the CDOs from "Held to Maturity" into "Available for Sale" during the fourth quarter 2013. This will entail a one-time after tax cost of $387 million.
Zions has a significant portfolio of CDO securities. In the recent past, with the overall improvement in the market, the trading prices of these securities were increasing and going forward could have driven the company's growth. The recent development, therefore, is a setback for Zions, wherein it has to bear one-time non-cash charges as well as damages to its capital ratios.
Notably, Zions' common equity Tier 1 ratio under Basel I rules will decline by 73 bps from the reported figure as of Sep 30, 2013. Tangible common equity ratio will fall 6 bps to 7.84%.
The intraday price movement reflected depreciation in the stock price after the news release. However, the company's shares later gathered momentum and closed at $28.56. This marked slight improvement from prior day closing figure of $28.47.
The initial market reaction was mixed and indicates nothing conclusive. However, we may expect the Zions' share price to tread downwards as the Volcker Rule will likely drag its fourth-quarter earnings.
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