The Zacks Analyst Blog Highlights:Bank of America, Fannie Mae, Freddie Mac, BB&T and Starbucks

Feb 03, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Feb. 3, 2014 /PRNewswire/ -- 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 Bank of America Corp. (NYSE: BAC-Free Report), Fannie Mae (OTCBB:FNMA-Free Report), Freddie Mac (OTCBB:FMCC-Free Report), BB&T Corp. (NYSE: BBT-Free Report) and Starbucks Corporation (Nasdaq: SBUX-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Regulators Seek Higher Penalty from BofA

The Federal authorities are now seeking $2.1 billion in penalties from Bank of America Corp. (NYSE: BAC-Free Report) for the sale of risky residential mortgage-backed securities (RMBS). The RMBS were sold by Countrywide Financial Corp., which was acquired by BofA in 2008, to Fannie Mae (OTCBB:FNMA-Free Report) and Freddie Mac (OTCBB:FMCC-Free Report).

The latest penalty is more than double the fine of nearly $864 million demanded earlier. The present amount is based on the total revenue that BofA earned from the loans, while the earlier amount took into consideration the losses incurred by Fannie Mae and Freddie Mac from the purchase of RMBS.

The case revolves around the RMBS sold by Countrywide between Aug 2007 and May 2008. The loans underlying these RMBS were given without proper assessment of the creditworthiness of borrowers.

The Federal prosecutors accused Countrywide of creating the program 'high-speed swim lane' (HSSL) or 'Hustle,' which rewarded employees for the quantity rather than quality of loans. These loans were then bundled and sold to Fannie Mae and Freddie Mac.

Notably, BofA has until Feb 26 to respond to the latest filing, while the aggregate penalty will be decided by U.S. District Judge Jed Rakoff after the hearing starts on Mar 13.

BofA continues to suffer from flaws in Countrywide's transactions prior to the financial crisis. The company has incurred more than $30 billion in losses from bad loans, MBS claims and lawsuits.

Though BofA has settled quite a few lawsuits related to Countrywide, it still faces numerous litigations that could weigh on its financials going forward. One such legal headwind is the $8.5 billion settlement with institutional investors that is still awaiting court approval.

Currently, BofA carries a Zacks Rank #2 (Buy). Another major global bank worth considering is BB&T Corp. (NYSE: BBT-Free Report), which has the same Zacks Rank as BofA.

Management Shuffle at Starbucks

Starbucks Corporation (Nasdaq: SBUX-Free Report), recently changed its management positions to derive maximum benefits out of the retail, consumer, mobile and digital shifts that are currently underway by leveraging its resources and operations.

Starbucks chief financial officer and group president of Global Business Services, Troy Alstead will be promoted to the position of chief operating officer (COO). Scott Maw will be promoted to the position of Global Technology and Global Supply Chain Organizations president and new chief financial officer. Craig Russell will be the executive vice president of Global Coffee

Together with the new leadership team, Howard Schultz, Starbucks chairman, president and CEO, will focus on innovation in coffee, tea and next generation retailing and payment initiatives to position Starbucks for its future global growth.

Alstead will be responsible for regular operations of the enterprise, which include allotting investments across business units. Alstead will head Group presidents including Cliff Burrows (U.S., Americas and Teavana), John Culver (China and Asia Pacific, Channel Development and Emerging Brands), EMEA president Kris Engskov and Global Technology and Global Supply Chain Organizations president and new chief financial officer Scott Maw.

Craig Russell will be the executive vice president of Global Coffee and overlook Starbucks Farmer Support Centers and supply chain operations, which involve all aspects of the coffee business, including quality, innovation, purchase, education and engagement.

During first-quarter fiscal 2014, Starbucks saw a major shift in consumer shopping behavior from store purchases to online purchase. Also, Schultz said that consumers preferred to gift shopping cards instead of a particular item this holiday season.

Dollars loaded on the loyalty cards increased an impressive 24% to $1.4 billion in the quarter, suggesting that millions of customers will be visiting Starbucks stores in the future quarters thereby boosting the top line. Also, the company processed more than 40 million new Starbucks card activations, valued at over $610 million in the U.S. and Canada alone in the first quarter.

Schultz believes that Starbucks' strong digital, card, loyalty and mobile capabilities make it one of the very few retailers to benefit from this shift in consumer shopping behavior. With the recent managerial changes, Schultz intends to focus on growth strategies and integration of retail and e-commerce, digital, card and mobile assets across the world.

Starbucks currently carries a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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