For Immediate Release
Chicago, IL – July 14, 2009 – 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: ACE Ltd. (ACE), Zenith National Insurance Corp. (ZNT), Employers Holdings Inc. (EIG), SeaBright Insurance Holdings Inc. (SBX) and International Business Machines (IBM).
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Here are highlights from Monday’s Analyst Blog:
Reduced Payroll Lowers Premiums
7.2 million people have become jobless since the recession began in December 2007. Also, the number of job openings has declined by 1.5 million, or 36% year-over-year as of May 2009. With the deepening economic uncertainty, companies are aggressively focusing on cost control which is mostly driven by retrenchment.
The steady rise in medical costs that continues to outpace wages is another problem for the workers compensation insurance industry. While indemnity claim costs have surpassed wage increases, low investment yields are pressuring industry underwriting results. This, coupled with low interest rates, is continuing to challenge pricing in the market.
Among the worst affected are ACE Ltd. (ACE), Zenith National Insurance Corp. (ZNT), Employers Holdings Inc. (EIG) and SeaBright Insurance Holdings Inc. (SBX).
Until the economy recovers, payrolls will remain curtailed. As premium production is directly correlated with payroll, any dramatic improvement in the industry’s topline is unlikely.
IBM a Buy Ahead of Earnings
We maintain our Buy rating on International Business Machines (IBM) ahead of its second-quarter earnings, which the IT giant is expected to release on July 16, 2009.
Given the size and diversified businesses of IBM, we believe that it is a defensive play in the current environment as the company derives a significant portion of its revenue from international sales. Due to its large non-US revenue base, IBM has been better insulated from the recent weakness in the U.S. economy than many of its peers.
IBM performed well in the first quarter of 2009 despite the difficult economic environment because of its long-term strategic focus, including shifting to software and services, divesting commodity businesses, creating solutions that help clients reduce cost, conserving capital and cost cutting.
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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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