The Zacks Analyst Blog Highlights:AT&T, Sprint, Verizon Communications, T-Mobile US and UBS

Jan 17, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 17, 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 AT&T Inc. (NYSE: T-Free Report), Sprint Corp. (NYSE: S-Free Report), Verizon Communications Inc. (NYSE: VZ-Free Report), T-Mobile US Inc. (NYSE: TMUS-Free Report) and UBS AG (NYSE: UBS-Free Report).

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Here are highlights from Thursday's Analyst Blog:

Mobile M2M Market Thriving

The machine-to-machine (M2M) wireless communications technology has been significantly driving wireless service provider's mobile data revenues. M2M is a rapidly growing market opportunity.

According a recent report by research firm IDATE, the M2M communications global market is expected to generate revenues of over $53 billion, substantially up from $33 billion in 2013.  Over the same time frame, the number of M2M module deployment is predicted to rise from 175 million to 470 million.

Earlier, research firm Ovum had forecasted that the global M2M communications market size will reach nearly $45 billion in 2018. Industry verticals like healthcare, manufacturing, energy and utilities will largely benefit from the progress.

A typical mobile M2M messaging system establishes a wireless communications link to connect a group of devices to a computer server or another device for the purpose of transmitting data contained within those devices.

The M2M market provides the opportunity to millions of mobile-enabled devices, like cars, utility meters, vending machines and consumer electronics devices to get connected to a wireless network.

Mobile M2M connections, which enable wireless data calls between machines, have gained significant market traction. Deploying innovative connectivity platforms to deliver seamless, fully integrated M2M communication with global connectivity has become an important factor to mobile service providers' success in this market.

Next-generation (4G) technology is also boosting the growth of M2M segment as it provides exceptionally high speeds. Massive throughput and low-latency period of LTE technology enable easy access for large-scale applications like fleet management, security, automotive, navigation, and video content.

In the U.S., all four national telecom operators, namely, AT&T Inc. (NYSE: T-Free Report), Sprint Corp. (NYSE: S-Free Report), Verizon Communications Inc. (NYSE: VZ-Free Report) and T-Mobile US Inc. (NYSE: TMUS-Free Report) are expanding their M2M operations.

UBS Downgraded to Underperform

On Jan 15, 2014, we downgraded our recommendation on UBS AG (NYSE: UBS-Free Report) to Underperform from Neutral based on the negative earnings estimate revisions over the last 30 days. Among the headwinds, the company's third-quarter results were disappointing. We don't expect any significant improvement in earnings in the upcoming quarters given the current challenges across the industry and the economy.

Why This Downgrade?

The Swiss banking giant has witnessed downward earnings estimate revisions over the last 30 days, pulling the Zacks Consensus Estimate for 2013 down by 1.6% to $1.25 per share. Also, for 2014, it declined 6.4% to $1.47 per share. This reflects analysts' negative sentiment on the company's fundamentals.

UBS AG's third-quarter 2013 net income attributable to shareholders of CHF 577 million ($619.1 million) was substantially below the prior-quarter's income of CHF 690 million ($731.8 million). Earnings for the quarter were primarily affected by higher net charges related to litigation, regulatory and similar matters. Notably, these net charges also increased during the nine months ended Sep 2013.

Further, UBS AG's balance sheet is expected to be hit by the recent regulatory compliance that requires banks using the internal ratings-based (IRB) approach to apply a bank-specific IRB multiplier when calculating risk-weighted assets (RWA) for Swiss residential mortgages. This will lead to an increased RWA of CHF 2–3 billion each year from 2013 through 2019 for the company.

The absence of significant improvements in the European banking system and U.S. macro-economic issues could weigh on UBS AG's financials in the upcoming quarters.   

However, UBS AG currently carries a Zacks Rank #3 (Hold).

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