The Zacks Analyst Blog Highlights: Tesla Motors, Prudential Financial, Hartford Financial Services Group, Kemper and Old Republic International
CHICAGO, Nov. 19, 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), Prudential Financial Inc. (NYSE:PRU-Free Report), Hartford Financial Services Group Inc. (NYSE:HIG-Free Report), Kemper Corporation (NYSE:KMPR-Free Report) and Old Republic International Corporation (NYSE:ORI-Free Report).
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Here are highlights from Monday's Analyst Blog:
Tesla Faces Safety Lawsuit
A class action lawsuit has been filed against Tesla Motors, Inc. (Nasdaq:TSLA-Free Report) following the recent fire incidents in Model S cars. Law firm Morgan & Morgan filed the suit on behalf of investors who purchased the stock between May 10 and Nov 6 this year.
The lawsuit accused Tesla of making misleading statements regarding the safety of Model S. Additionally, the statements did not reveal the puncture and fire risks in the car's undercarriage and lithium ion battery pack. Moreover, it alleges that defects in the car have led to fire in the battery pack in specific situations. The lawsuit also holds Tesla liable for failing to deliver enough cars to offset the fall in revenue from other sources and alleviate analyst apprehension.
The lawsuit is referring to the recent fire incidents in three Model S cars. In early October, the first Model S electric vehicle caught fire near Seattle, U.S. According to Tesla, the incident took place after the vehicle collided with a "large metallic object", which damaged the front end of the car. This mishap was soon followed by a fire in another Model S car in Merida, Mexico. The vehicle had caught fire after crashing a wall and hitting a tree.
The third Model S vehicle was reported to have caught fire on Nov 7, 2013. The incident occurred near Smyrna, Tenn., after the vehicle hit road debris. The collision led to fire in the front portion of the vehicle.
Incidentally, Tesla's Model S has won the top vehicle safety rating from the National Highway Traffic Safety Administration (NHTSA). The car obtained a five-star rating overall and also for each of its subcategories. This was a coveted award for Tesla as only 1% of cars tested receive the 5-star rating from NHTSA. This rating means that Tesla's Model S sedan offers exceptional safety to the passengers as it has the lowest possibility of injury to passengers among all major cars sold in the U.S. The safety score of this sedan exceeded the score of most sports utility vehicles and minivans.
Meanwhile, in a positive development, Tesla sold 6,554 cars in California through the end of September, according to a report by the California New Car Dealers Association. The electric carmaker captured 11% market share in the luxury and sports car segment. California is the largest market for Tesla's Model S cars.
Prudential Kept at Outperform
We are reiterating our Outperform recommendation on Prudential Financial Inc. (NYSE:PRU-Free Report) following strong third quarter results, which included a 40.0% positive earnings surprise. Over the past four quarters, this Zacks Rank #2 (Buy) life insurer delivered positive surprises continuously, with an average beat of 18.5%.
Why reiterate?
On Nov 6, Prudential reported third quarter operating earnings of $2.94 per share, far exceeding the Zacks Consensus Estimate of $2.10. Results also exceeded earnings by 85% year over year. Earnings out performance came on the back of strong contribution from each of the company's operating segments, headed by its Retirement Solutions and Investment Management, where operating income increased more than double, compared to the year-ago quarter.
Over the last 7 days, the Zacks Consensus Estimate for 2013 moved up by 1.2% to $9.65 . The expected long term earnings growth is 14.2%.
Prudential has a well diversified business profile with reach in different markets and a broad product portfolio.
Prudential is set to benefit from the aging American population. The company will witness a huge demand for retirement benefits products as baby boomers enter retirement.
Moreover, the acquisition of Individual Life Insurance business of The Hartford Financial Services Group Inc. (NYSE:HIG-Free Report) at the end of 2012, will help Prudential earn a place among the top five of the largest individual life insurance companies in the U.S. in terms of new recurring premium sales.
The company also has significant overseas business which is generating strong earnings.
Additionally, Prudential's Retirement segment is set to greatly benefit from the company's penetration in the pension risk transfer business.
However, we remain watchful for Prudential's U.S. Group insurance business as poor disability margins pressure results. Also, Prudential's exposure to products like annuities and universal life, which guarantees minimum return and stricter capital standards will keep its capital under strain.
Other Stocks
Kemper Corporation (NYSE:KMPR-Free Report) and Old Republic International Corporation (NYSE:ORI-Free Report) under our coverage carrying favorable Zacks Rank #1 (Strong Buy) are worth considering.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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