The Zacks Analyst Blog Highlights: The Goldman Sachs Group, Bank of America, JPMorgan Chase, eBay and Amazon.com

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Feb 23, 2012, 09:30 ET

CHICAGO, Feb. 23, 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), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Company (NYSE: JPM), eBay Inc. (Nasdaq: EBAY) and Amazon.com (Nasdaq: AMZN).

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Here are highlights from Wednesday's Analyst Blog:

Goldman in Global Expansion Mode

On Tuesday, Globes, a business daily of Israel, reported that The Goldman Sachs Group Inc. (NYSE: GS) has purchased a 10% stake in Israel-based Viola Group for $20 million. With about $2 billion in investments under management, Viola Group is a leader in innovative private equity investment. The company is focused on technology-based growth opportunities in Israel.

According to the source, Goldman will not be the part of management team of Viola Group following the stake buyout; it will be just a financial stakeholder. Moreover, the proceeds of the transaction will be distributed among partners of the company.

Globes also reported, in the last few years, Goldman has invested about $250 million in Israeli companies. Moreover, the investment boutique covers acquisition of stakes in mostly high-tech companies in Israel. In addition, the business daily affirmed that Goldman's Investments include Powermat Technologies Ltd., Mobileye Inc., and Cyber-Ark Ltd. However, all of these are undisclosed by Goldman till date.

Like other big Wall Street banks such as Bank of America Corporation (NYSE: BAC) and JPMorgan Chase & Company (NYSE: JPM), Goldman has been buckled under the weakness in the wider economy and the fundamental pressures on the banking sector. Last month, the bank reported a 67% fall in its 2011 earnings compared to the prior year, and has targeted approximately $1.4 billion in run-rate compensation and non-compensation expense reductions by trimming the number of staff and planned expenditures.

Through acquisitions and expansions globally, Goldman is trying to grab every opportunity to leverage its strong reputation in the corporate trust market. The expansion mode of the company has been mounting since the beginning of 2012.

Last week, GS Capital Partners, a private equity unit of Goldman, along with Advent International, a private equity firm, agreed to purchase credit-reporting firm TransUnion Corp in a $3 billion deal. However, the terms of this deal were undisclosed. The deal is expected to be completed by the first half of the second quarter of 2012.

Following the completion of the takeover, Advent and Goldman look forward to provide their clients with continual services and superior information, and risk management products in the US as well as in other key growth markets.

Further, in the first half of February, Goldman agreed to purchase 4.8% stake in Mongolia's Trade and Development Bank. Goldman is one of those foreign banks who have shown interest in the Mongolian economy. Goldman's global expertise, experience and financial strength will help the Mongolian bank to develop further. Goldman's stake buyout in the Mongolian bank indicates its plan to gain exposure in the Mongolian economy, whose growth is stimulated by the developing resources of the country.

Moreover, Goldman Sachs Asset Management (GSAM), a wing of Goldman also announced its plan to purchase Vermont-based Dwight Asset Management Company from Old Mutual Asset Management (OMAM). The deal is expected to close in the second quarter of 2012.

The completion of the acquisition would help Goldman gain significant market share in the defined contribution investment-only business. Moreover, the bank would be able to prosper its defined contribution business and provide more investment plans to facilitate retired people in capitalizing their hard earned retirement savings.

The acquisition spree of Goldman indicates the company is moving ahead on the path of improving its financial position. The completion of such deals will enable the bank to enjoy a better position in the ongoing uncertain global economic scenario compared to its peers.

Goldman currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral recommendation on the stock.

eBay to Extend Auto Catalogue

E-commerce service provider, eBay Inc. (Nasdaq: EBAY) has agreed to acquire WHI Solutions (WHI), a provider of software and digital catalog solutions for auto parts distributors and retailers. Terms of the deal were not disclosed.

WHI Solutions offers an e-catalog for electronic parts and service dealer data for over 39,000 North American vehicles. This acquisition will not only beef up the catalog on eBay Motors, which sells both used cars and car parts and equipment for boats, trucks and motorcycles, but it will also enhance seller experience. Listing inventory will be made easy, with automatically populating listing fields including description, image and vehicle application data through millions of stock keeping units (SKUs) in the WHI catalogue.

eBay faces increasing competition from major online retailers, such as Amazon.com (Nasdaq: AMZN), as well as many other smaller players. But eBay Motors is one area where companies like Amazon haven't made any substantial headway. Lately, shopping for cars or car parts on mobile phones has become quite popular.

The acquisition of WHI will attract more online car shoppers, thereby increasing eBay's customer base. With the high value of autos and auto-parts along with a healthy expected growth in the U.S. auto market, the eBay motors app is expected to increase sales further.

According to eBay's website, WHI offices will remain in New York, Los Angeles and New Jersey and its technology and client base will all be integrated into eBay Motors.

eBay is one of the largest online retailers in the world and appears well positioned to grow through strategic acquisitions. In order to maintain its strong position in the online market and fight growing competition, eBay made 4 other acquisitions in 2011. GSI Commerce was acquired for $2.4 billion, Magento for an undisclosed sum, WHERE Inc. for $135 million and Zong for $240 million. We believe these acquisitions will help eBay to expand its business, increase sales and provide a competitive edge over Amazon.

Currently, eBay shares carry a Zacks #3 Rank, indicating a short-term Hold recommendation.

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