CHICAGO, June 8, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Liberty Global, Inc. (Nasdaq: LBTYA) as the Bull of the Day and HDFC Bank, Ltd. (NYSE: HDB), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com (Nasdaq: AMZN), Google Inc (Nasdaq: GOOG) and Northern Trust Corp. (Nasdaq: NTRS).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We upgrade our recommendation on Liberty Global, Inc. (Nasdaq: LBTYA) to Outperform, backed by the company's excellent financial results for the first quarter of 2011. Long-term potential of Liberty Global is visible now after its decision to acquire the third-largest cable operator in Germany, Kabel Baden.
Western Europe became an extremely lucrative segment for the cable operators. These markets witnessed growing demand for pay-TV services coupled with triple-play bundled services that combine video, Internet and telephony. Liberty Global also purchased the second largest German cable MSO, UnityMedia in 2010.
In our view, the enlarged company is likely to take over the market leadership position from the incumbent Kabel Deutschland. Deployment of DOCSIS 3.0 networks has enabled the company to provide considerably high-speed data transmission, which is on par with other large European cable operators.
HDFC Bank, Ltd.'s (NYSE: HDB) fiscal fourth quarter 2011 (ended March 31, 2011) net earnings were up 33.2% year over year. However, higher operating expenses were among the negatives. The company is still exposed to the threat related to higher cost of funds. Also, growing competition in the retail space with the re-entry of peers is a future concern.
Most of Indian banks are expected to encounter higher costs of funds as they have to raise deposit rates to meet increasing loans demand. This will keep margins of some banks, including HDFC Bank, under pressure.
Our six-month target price of $146.00 per ADS equates to about 24.7x our earnings estimate for fiscal 2012. This target price implies an expected negative total return of 9.3% over that period. This is consistent with our long-term Underperform recommendation on the ADSs.
Latest Posts on the Zacks Analyst Blog:
Groupon & the Daily Deals Biz
The market for daily deals continues to heat up, as technology heavy-weights such as Amazon.com (Nasdaq: AMZN) and Google Inc (Nasdaq: GOOG) enter the fray. Groupon filing for an IPO last week did not really come as a surprise, since there has been a lot of hype surrounding it and analysts have been providing lofty valuations.
Understanding the revenue model was truly difficult, however, since the heavy discounts being offered were obviously being borne by either the vendor, or the intermediary selling the coupon (in this case Groupon), or by the two parties together.
Typically, the coupon seller would be buying discount coupons from the vendor and sell them to the buyer, for example, a $10 discount coupon enabling a purchase of up to $20. Therefore, the acquisition price by the coupon seller would be of utmost importance.
If the face value of the coupon ($10 in the above example), is paid to the vendor, this would mean that although the discount was shared by the two, there was no cash inflow to the coupon seller. So the coupon seller's only gain would be the increase in its prospective customers, while its cash outflow would be the amount paid to the vendor.
On the other hand, if the coupon seller pays less for the coupon than its face value, it would be able to keep the difference thus generated from the sale of the coupon. With this in mind, if we take a look at the coupon sellers, it looks like a difficult operating model, where they would not under normal circumstances be able to generate very high margins.
FINRA Fines Northern Trust Unit
Northern Trust Securities, a wing of Northern Trust Corp. (Nasdaq: NTRS), has been fined $600,000 by the Financial Industry Regulatory Authority (FINRA) for inadequately overseeing collateralized mortgage obligations' (CMOs) sales and lacking proper systems to supervise certain high-volume securities trades.
FINRA has found that between October 2006 and October 2009, the Northern Trust unit could not capture or analyze a major chunk of the company's business that included all CMO transactions and certain trades of 10,000 equity shares or more, along with trades of 250 or more of fixed-income bonds. As a result, 43.5% of the firm's business from January 2007 to June 2008 was not reviewed at all.
With a flawed system at work, Northern Trust could not properly monitor the customer accounts against possibly unsuitable CMO concentration levels. Moreover, due to the lack of proper system to oversee the large block equity and fixed income trades, the company failed to analyze these trades for suitability, concentration, excessive trading, excessive mark-ups or commissions, or for trading in restricted stocks. This, in turn, exposed the investors to the risk of losing billions.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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