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The Zacks Analyst Blog Highlights: Citigroup, Bank of America, UBS, Deutsche Bank and Blackstone Group

C BAC UBS DB BX

 ZacksTrade Now

For Immediate Release

Chicago, IL – November 21, 2012 – 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 Citigroup Inc. (C - Analyst Report), Bank of America Corp. (BAC - Analyst Report), UBS AG (UBS - Analyst Report), Deutsche Bank AG (DB - Analyst Report) and The Blackstone Group LP (BX - Analyst Report).

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Here are highlights from Tuesday’s Analyst Blog:

More Layoffs from Citi

 

Citigroup Inc. (C - Analyst Report) is on course to slash 300 jobs in sales and trading operations worldwide, according to a report by The Wall Street Journal. This retrenchment of Citi comes as the company counters revenue slouch with expense cut initiatives.

Last year, Citi made a 5% cutback in its securities-and-banking division. This resulted in 900 layoffs. Notably, the economic slump has had a severe impact on the Securities sales-and-trading business across several large Wall Street firms. With investors growing wary of the European debt crisis as well as U.S. economic outlook, this business has witnessed reduced volumes and lower revenues.

The onset of the current layoffs was triggered prior to the departure of Mr. Pandit, the former Chief Executive Officer of Citi. Further, with its new CEO, Michael Corbat, Citi remains committed to continue with the efficiency improvement measures and the expense management efforts.

Our Take

In the midst of a challenging operating environment, lower returns and stringent capital norms, many Wall Street banks are trimming businesses to meet the aforementioned challenges. In addition to Citi, Bank of America Corp. (BAC - Analyst Report) is rightsizing its business and slashing jobs to address revenue slump. Further, a number of European counterparts such as UBS AG (UBS - Analyst Report) and Deutsche Bank AG (DB - Analyst Report) have announced significant layoffs.

We believe that with a protracted economic recovery, bolstering revenue has become a challenge. Therefore, sustaining and elevating profitability through cost reduction measures including layoffs is what several banks are looking at. Therefore, until a recovery in revenue occurs, such actions are anticipated to continue to help strengthen profit levels and capital ratios.

Citi currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering its fundamentals, we also have a long-term Neutral recommendation on the stock.

 

 

Blackstone Seals Vivint Acquisition

 

The Blackstone Group LP (BX - Analyst Report) announced the completion of the acquisition of Vivint Inc, a security provider, which offers home automation and technology services. The acquisition worth more than $2 billion was made by Blackstone Capital Partners VI, L.P., a fund managed by Blackstone for its private equity investors.

The acquisition includes Vivint, Vivint Solar and 2GIG Technologies. Vivint Solar is one of the fastest growing solar companies in the U.S., which furnishes reasonably priced solar solutions to residential customers. On the other hand, 2GIG Technologies offers security and automation equipment for residential and small business purposes.

Vivint had earlier short-listed Blackstone, Ares Management LLC and GTCR LLC among the potential buyers. However, it was Blackstone which toppled its rivals to acquire Vivint.

As per an executive at Blackstone, Vivint's efficiency and presence in an array of segments were the primary considerations during the acquisition bid. In addition to this, such companies are attractive for private equity firms mainly due to the stable subscriber fees charged from the customers, which can contribute towards servicing the debt taken during an acquisition.

Moreover, this acquisition will help Blackstone tap into Vivint’s promising growth trajectory. Blackstone is expected to provide capital to fund an expansion of Vivint’s services, its marketing potential to allure more clients and its access to foreign markets. As a result, Blackstone’s top line will definitely get a boost in the near-term.

 

 

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