Zacks Bull and Bear of the Day Highlights: Toyota Motor Corporation, CRA International, Bank of America Corporation, Wells Fargo & Company and SunTrust Banks Inc.
CHICAGO, Sept. 17, 2012 /PRNewswire/ -- Zacks Equity Research highlights Toyota Motor Corporation (TM) as the Bull of the Day and CRA International (CRAI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America Corporation (BAC), Wells Fargo & Company (WFC) and SunTrust Banks Inc. (STI).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=10479.
Here is a synopsis of all five stocks:
Toyota Motor Corporation (TM) continues to play a pivotal role in the global market for fuel-efficient and environment-friendly vehicles. It also expects to benefit from its cost reduction measures and continued focus on the emerging markets.
The company saw a marked recovery in the first quarter of its current fiscal year by posting a significant Y91.31 increase in earnings to Y91.68 per share ($1.14) due to strong demand for its vehicles and positive impact of cost reduction measures. For fiscal 2013, it expects higher consolidated revenues of Y22.00 trillion, operating income of Y1.00 trillion and profits of Y760.0 billion, compared with fiscal 2012.
Therefore, we continue with our Outperform recommendation on the stock and set a target price of $98.00. This target price, 14.0X our 2013 EPS estimate, reflects our positive outlook.
Following the footsteps of the previous-quarter results, CRA International's (CRAI) second quarter 2012 results were also discouraging. The earnings lagged the Zacks Consensus Estimate significantly, owing to the weak performance of its management consulting business, partially offset by healthy litigation business.
As a result of the soft consulting business, all key-line items experienced a downside. The management consulting business suffered because of poor performance of the Chemicals practice and Middle East operations. Although management is undertaking restructuring actions to improve profitability and boost performance, we remain concerned about the ongoing economic uncertainty in Europe, cautious spending by clients, stiff competition and currency fluctuations.
Hence, we reiterate our Underperform stance on the stock. Our six-month target price of $14.00 per share equates to about 16.5x our earnings estimate for 2012. With no dividend to supplement, this target price implies a negative return of 11.7% over that period.
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BofA Settling Discrimination Claims
Bank of America Corporation (BAC) has decided to settle the discrimination allegations brought by the government against it. The bank was accused of being prejudiced against disabled mortgage loan applicants.
As per the government, BofA dishonored the Fair Housing Act and the Equal Credit Opportunity Act by asking the disabled loan applicants to furnish invasive medical information from a medical practitioner. The company accepted its folly and is now looking to settle the matter.
BofA will engage an administrator to sort out 25,000 loan applications involving income from the Social Security Disabled Insurance (SSDI) to identify the victims. The company is willing to shell out $1,000, $2,500 or $5,000 to entitled mortgage loan applicants who were asked to present a letter from their doctor to document the income they got from SSDI.
This is not the first time that BofA is facing allegations pertaining to the violation of Fair Housing Act and the Equal Credit Opportunity Act. In December 2011, the bank paid out $335 million to the Department of Justice (DoJ) to settle civil charges against its Countrywide Financial unit.
The lawsuit against Countrywide stated that the company had used discriminating lending practices against qualified African-American and Hispanic borrowers on home loans. The Attorney General affirmed that these minority borrowers, who qualified for traditional mortgage rates, were pushed into subprime loans with higher interest rates.
Similar Settlements by Other Institutions
In July 2012, the DoJ announced that Wells Fargo & Company (WFC) had agreed to pay nearly $175 million to settle civil charges against it. The settlement agreement was filed with the U.S. District Court in Washington, D.C. and awaits approval. The lawsuit alleged Wells Fargo of discriminatory lending practices against eligible African-American and Hispanic borrowers on home loans. Moreover, some of these borrowers were dragged into subprime mortgages.
Earlier in May, mortgage-lending unit of SunTrust Banks Inc. (STI) decided to recompense the DoJ nearly $21 million to resolve civil charges against it. The lawsuit alleged SunTrust of discriminatory lending practices against suitable African-American and Hispanic borrowers on home loans.
Our ViewpointShares of BofA currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. However, considering the fundamentals, we maintain a long-term 'Neutral' recommendation on the stock.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=10479.
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