The Zacks Analyst Blog Highlights: Toyota Motor, Citigroup, Bank of America, Wells Fargo and Goldman Sachs Group

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Dec 29, 2011, 09:30 ET

CHICAGO, Dec. 29, 2011 /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 Toyota Motor Corp. (NYSE: TM), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC) and Goldman Sachs Group Inc. (NYSE: GS).

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Here are highlights from Wednesday's Analyst Blog:

Toyota Launches Fuel-Efficiency Winner

Toyota Motor Corp. (NYSE: TM) launched the world's best fuel-efficient gasoline-electric hybrid car in Japan, known as Aqua. The car, which will be marketed in the U.S. as Prius C, delivers 35.4 km per liter (83.3 miles per gallon), beating the mileage of current Prius model that gives 32 km per liter.

Earlier the company had revealed that Aqua uses the same powertrain as the Prius sedan. It is priced at about ¥1.7 million ($22,000) in Japan, which is ¥300 thousand less than the current Prius in order to attract the entry-level, fuel-efficient car buyers. The automaker intends to sell 12,000 units of Aqua per month in Japan.

Toyota occupied the No.1 spot in hybrid offerings after introducing Prius in 1997. Since then, the automaker sold more than 3.4 million hybrid vehicles till date. It expects to launch as many as 10 more gasoline-electric models by 2015 and offer a fuel-sipping option across its entire line-up by 2020.

In May 2011, Toyota introduced Prius Alpha hatchback wagon, which is derived from the third generation Prius model, as Prius V (5-seater) in Japan. The vehicle is priced at ¥2.35 million ($29,000) and is equipped with nickel-metal hydride (NiMH) batteries like its predecessor.

Toyota plans to sell Prius V in North America in a year. It also plans to sell the 7-seater version of Prius Alpha in Europe as Prius Plus in mid-2012. The automaker intends to sell 2,000 units of Prius V per month in North America and 2,000 units of Prius Plus per month in Europe.

Toyota will also launch the plug-in version of Prius hybrid car next year that comes with an excellent mileage and affordable price. The plug-in-hybrid (PHV) vehicle boasts a mileage of 61.0 km per liter (143 miles per gallon) in combined EV and hybrid driving modes under Japanese test conditions. Meanwhile, the U.S. version of the Prius PHV will provide a mileage of 87 mpg.

Citi-SEC Settlement Gets Delayed

Citigroup Inc.'s (NYSE: C) settlement deal with the US Securities and Exchange Commission (SEC) is getting delayed. The SEC has won a federal appeals court approval of an emergency ruling, which brought a temporary suspension to the proceedings. The SEC has appealed against a federal judge's decision to reject its $285 million settlement of securities fraud charges with Citi.

The case will be put on hold until at least January 17, 2012. This delay would facilitate the appeals court to decide whether to approve an expedited hearing on the appeal. The court's judgment will be vital here as future settlement cases involving SEC would bear the brunt because this judgment will be considered as a precedent.

Notably, the SEC has alleged Citi of misleading investors while selling a $1 billion fund in 2006 and 2007, which was invested in mortgage-related securities. Citi was accused of not letting investors know that it was betting against many of the assets. Incidentally, Citi neither admitted nor denied the wrongdoing that it had been accused of.

The federal judge rejected the settlement in November, citing that it was not fair, reasonable or adequate and not in public interest. The judge objected to the practice of settlement by the SEC, under which the companies neither agree nor deny to the charges made by the defendants. The settlement, which involved a loss of over $700 million by investors, has been referred to as a "pocket change" by the judge.

On the other hand, according to the SEC, the judge committed a legal error by setting such a new standard, which in turn would deprive investors of substantial, certain and immediate relief.

Post financial crisis, SEC has ramped up its efforts to regulate institutions and penalize them for wrongdoings and misrepresentation of facts while selling their investment products. Besides Citi, others that have also reached settlements or have been penalized in the past include Bank of America Corp. (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC) and Goldman Sachs Group Inc. (NYSE: GS).

We believe that while such settlements dent the company's financials to some extent, they also reduce the litigation overhang.

Citi currently retains a Zacks #3 Rank, which translates into a short-term 'Hold' rating.

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