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For Immediate Release
Chicago, IL – February 6, 2012 – Zacks Equity Research highlights Aetna Inc. ( (AET - Analyst Report) as the Bull of the Day and JAKKS Pacific ( (JAKK - Analyst Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on U.S. Bancorp ( (USB - Analyst Report), Mitsubishi UFJ Financial Group Inc. ( (MTU - Analyst Report) and UMB Financial Corporation ( (UMBF - Snapshot Report).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
Aetna Inc.'s ( (AET - Analyst Report) fourth quarter 2011 results came in line with the Zacks Consensus Estimate. Earnings were, however, up 54% year over year. The quarter primarily benefited from low medical utilization and a decline in operating expense.
Overall, Aetna performed well in 2011, beating earnings estimates every quarter, on the back of low medical utilization, pricing discipline, medical cost management strategies and cost controls. The year saw the company making strategic investments in acquisitions and technologies, with an intention to extend Aetna's core health business and also to capitalize on exciting new consumer and provider opportunities emerging in the marketplace. Aetna's strong operating results and significant capital generation will allow it to continue investing for the future.
We expect the company to continue performing well in 2012. We expect Aetna to continue to benefit from gains in the Medicaid and Medicare segments, fast growing health services segment and a strong balance sheet.
Bear of the Day:
Challenging holiday sales hit JAKKS Pacific ( (JAKK - Analyst Report) badly, which consequently made the company cut its fiscal 2011 guidance. The labor shortage in Asia and an increase in input costs also remained a drag on the stock.
An underperformance in the third quarter's top and bottom line makes us cautious on the stock. Hence, we downgrade the stock from Neutral to Underperform recommendation.
Our six-month target price of $13.00 equates to about 13.0x our estimate for 2012. The target price implies an expected total return of negative 10.1% over that period.
Latest Posts on the Zacks Analyst Blog:
U.S. Bancorp to Buy Trust Business
U.S. Bancorp ( (USB - Analyst Report) is making a strategic acquisition for its institutional trust and custody division. The company through its lead bank, U.S. Bank National Association, has entered into a definitive agreement to buy from Union Bank, N.A. its institutional trust business that offers services to retirement plans, labor management trusts and registered investment advisors.
Union Bank is a subsidiary of UnionBanCal Corp., which is owned by Mitsubishi UFJ Financial Group Inc. ( (MTU - Analyst Report). Terms of the transaction were not disclosed.
The deal is a strategic fit for both U.S. Bancorp and Union Bank. For U.S. Bancorp, the acquisition will bring in approximately 4,300 client relationships representing $42 billion in assets under administration. The purchase will expand the company’s footprint and boost its market share in retirement plan, labor management trust and registered investment advisor business segments.
On the other hand, Union Bank plans to strategically augment its banking, global treasury management, asset management, brokerage, corporate trust and institutional custody business segments nationwide. Hence, the sale would help the company to reinvest capital in its core business.
U.S. Bancorp seems to be on an acquisition spree. Recently, the company’s lead bank, U.S. Bank National Association, agreed to acquire the Indiana corporate trust business of UMB Bank, a subsidiary of UMB Financial Corporation ( (UMBF - Snapshot Report). The deal will expand its trust business and is expected to be accomplished on March 2, 2012. However, the terms of the agreement were not disclosed by the company.
Last week, through its lead bank, U.S. Bancorp acquired the banking operations of BankEast, a subsidiary of BankEast Corporation, in a deal assisted by the Federal Deposit Insurance Corporation. BankEast is based in Knoxville, Tennessee.
For U.S. Bancorp, the deal is a strategic fit as the community banking model of BankEast is quite attractive and the deal would help it to expand in the Tennessee market. The 10 branches of BankEast in the Knoxville area will raise U.S. Bank’s total branch count in Tennessee to 91.
U.S. Bancorp has a well-balanced business model, with non-interest revenue representing nearly half of its total revenue. Its results have been driven by a combination of acquisitions and organic growth. Also, we expect continued investments in core banking and fee-based operations to generate long-term revenue growth.
Going forward, we expect U.S. Bancorp to benefit from its diversified revenue base and strategic acquisitions, thereby posting growth in core earnings going forward. Yet, a tardy economic recovery and a low interest rate environment along with regulatory issues remain our concern.
U.S. Bancorp shares maintain a Zacks #2 Rank, which translates into a short-term Buy recommendation.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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