JPMorgan’s Likely Unit Sales, Goldman’s New Estimates: Financial Business Review
The asset-management unit of JPMorgan Chase & Co. (NYSE:JPM) are among businesses ready for sale if american banks break up to raise stock prices, says Mike Mayo at CLSA Ltd., who went on to say that Citigroup’s (NYSE:C) Latin America division is another example of operations which hold “unrealized value.” Mayo also noted that bank share prices could double if cost of capital and risk at the companies were decreased, which would reversing their past efforts to grow returns by assuming additional risk. The analyst wrote that “The largest banks have underperformed not only on returns but also on efficiency, revenue, risk, transparency, reputation and stock price. When we ask, a large majority of investors indicate that breakups — divestitures, downsizings and de-mergers — would be good for stock prices.”
Shares of Goldman Sachs Group (NYSE:GS) closed modestly above their 52-week high Wednesday, not only benefitting from the fiscal cliff escape, but also from the sharply raised estimates at Credit Suisse, where the analyst Howard Chen elevated his fourth quarter earnings estimates from $2.50 to $4.60. The firm pointed to a strong finish for investment banking, equities, higher investing and lending contributions and discipline on expenses. Also, Goldman’s Outperform and $145 price target were kept.
American Realty Capital Trust (ARCT) has released a statement in response to Institutional Shareholder Services’ recent report in regards to its proposed merger with Realty Income Corporation, which reads in part, “We continue to support the unanimous recommendations of both our board of directors and that of Realty Income in favor of a merger between our two companies for the reasons we have set forth in prior filings and press releases, and which are reiterated below. We strongly disagree with ISS’ analysis, and believe that ISS reached the wrong conclusion in failing to recommend that ARCT stockholders vote for the proposed merger between ARCT and Realty Income. Importantly, ISS’s valuation analysis fails to take into consideration the technical nature of the net lease REIT sector and certain key REIT industry metrics.”
On Wednesday, Prudential Financial (NYSE:PRU) finalized its purchase of The Hartford’s Individual Life Insurance division, through a reinsurance transaction that was reported September 27th. Through the terms, the buyer paid The Hartford a cash consideration of $615 million, primarily of a ceding commission to provide reinsurance for about 700,000 Hartford life insurance policies, with face amount in force of roughly $135 billion.