Zacks Bull and Bear of the Day Highlights: IAC, Rackspace Hosting, Barclays, Royal Bank of Scotland Group and UBS
Zacks Equity Research
Zacks Bull and Bear of the Day Highlights: IAC, Rackspace Hosting, Barclays, Royal Bank of Scotland Group and UBS
For Immediate Release
Chicago, IL – May 15, 2013 – Zacks Equity Research highlights IAC (IACI) as the Bull of the Day and Rackspace Hosting (RAX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Barclays PLC (BCS), The Royal Bank of Scotland Group plc (RBS) and UBS AG (UBS).
IAC (IACI) recently delivered a big first quarter earnings beat on rising revenue and expanding profit margins. Since the Q1 report, analysts have risen their estimates significantly higher for both 2013 and 2014, sending the stock a Zacks Rank #1 (Strong Buy).
Analysts also project strong growth for IAC over the next couple of years. Despite this, shares trade at just 13x forward earnings, well below their historical multiple.
IAC is an internet company with more than 150 brands and products focused in the areas of search, applications, online dating, local and media. Its portfolio of websites includes Ask.com, About.com, Match.com, HomeAdvisor.com and Vimeo.com.
IAC reported strong first quarter results on April 30. Earnings per share came in at 74 cents, well ahead of the Zacks Consensus Estimate of 53 cents.
Revenue rose 16% to $742.2 million, marking IAC's 13th consecutive quarter of double-digit revenue growth. The 'Search & Applications' segment saw top-line growth of 16% while Match.com rose 8%.
Meanwhile, operating income before amortization soared 24% as the operating margin expanded 90 basis points to 15.2% of revenue.
Earnings estimates have risen sharply for IAC since the company's big Q1 beat. The Zacks Consensus Estimate for 2013 is now $3.41, up from $3.00 before the report.
Rackspace Hosting (RAX) reported its first quarter results on May 8. Although EPS missed the Zacks Consensus Estimate by just a penny, analysts revised their earnings estimates significantly lower for both 2013 and 2014.
This sent the stock to a Zacks Rank #5 (Strong Sell).
Despite a big selloff after the earnings report, expectations are still high for Rackspace with shares trading at more than 50x forward earnings.
Rackspace Hosting is an IT hosting company that provides cloud computing services. It is headquartered in San Antonio, Texas. The company was founded in 1989 and has a market cap of $5.9 billion.
Rackspace reported its first quarter results on May 8. Earnings per share came in at 19 cents, missing the Zacks Consensus Estimate by a penny. It was the company's second consecutive earnings miss.
Net revenue rose 20% to $362 million, but this was well below the consensus of $371 million.
Barclays PLC (BCS) won the dismissal of the U.S. lawsuit filed against it by the stockholders. The shareholders accused Barclays of indulging in activities which resulted in loss of money for them.
As per the U.S. District Judge, shareholders of Barclays' American depositary shares failed to provide evidence that the British bank misguided them about London Interbank Offered Rate (:LIBOR). LIBOR supports transaction worth trillions of dollars which are used to fix interest rates on credit cards, student loans and mortgages. The investors failed to prove that the bank did not disclose the potential liabilities.
Moreover, the judge pointed out that the stockholders were unable to provide evidence related to alleged LIBOR manipulation by Barclays between Aug 2007 and Jan 2009 which caused investors to lose money through Jun 2012.
The lawsuit was filed by a group on behalf of American Depositary Shares (ADS) purchasers. These ADS were bought between Jul 2007 and Jun 2012. Further, the case was persuaded by the St. Clair Shores Police & Fire Retirement System in Michigan and the Carpenters Pension Trust Fund of St. Louis in Missouri.
The judge said that the prosecutor is barred from amending the lawsuit since they failed to acknowledge the earlier deficiencies identified in the second complaint amended by them.
However, a probe is currently in progress by the U.S. and European regulators so as to check whether the banks devalued LIBOR during the financial crisis to emerge healthier.
Barclays was the first bank which settled with the authorities over alleged LIBOR manipulation. The bank reached a settlement of $453 million with the U.S. and European regulators in Jun 2012.
Recently, in Feb 2013, The Royal Bank of Scotland Group plc (RBS) conceded to pay a penalty of $612 million to the Financial Services Authority, Commodity Futures Trading Commission and Department of Justice to resolve charges against the bank for its involvement in the manipulation of LIBOR.
In Dec 2012, UBS AG (UBS) also agreed to pay a penalty of $1.5 billion to the U.S., U.K. and Swiss authorities to resolve charges against the bank for its involvement in the manipulation of LIBOR.
This lawsuit related to Barclays is not a part of the U.S. litigation filed by shareholders and others in relation to LIBOR manipulation against 16 banks.
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