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The Zacks Analyst Blog Highlights: IBM, Royal Bank of Scotland Group, Lloyds Banking Group, U.S. Bancorp and BNP Paribas

CHICAGO, Feb. 25, 2014 /PRNewswire/ -- 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 the IBM Corp. (NYSE:IBM-Free Report), Royal Bank of Scotland Group plc (NYSE:RBS-Free Report), Lloyds Banking Group plc (NYSE:LYG-Free Report), U.S. Bancorp (NYSE:USB-Free Report) and BNP Paribas SA (OTC:BNPQY-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

IBM Increases Cloud Investment

IBM Corp. (NYSE:IBM-Free Report) is aggressively pushing into the fast growing cloud computing market. According to Bloomberg, the IT major will spend another $1.0 billion on cloud-based software development through 2015.

In January this year, IBM announced a $1.2 billion investment aimed at building 15 data centers worldwide in addition to its already existing 25 data centers (including 13 SoftLayer data centers). The company will also invest $1.0 billion in Watson group, which will focus on developing cloud delivered big-data services to the market.

The expanded network of data centers and the further investment on software development is expected to boost IBM's cloud market share and falling revenues.

IBM took a number of strategic steps in 2013 to boost its presence in the cloud computing market. Besides pledging its support for OpenStack, the company acquired SoftLayer for $2.0 billion that allowed it to solidify its position in the infrastructure-as-a-service (IaaS) market.

Along with the $1.0 billion investment, IBM announced the launch of BlueMix, a platform-as-a service (PaaS) based on its open architecture. BlueMix runs on Softlayer's global cloud platform. The PaaS allows software developers to build and manage applications that cater to different verticals such as healthcare, retail and travel, in which IBM has low presence.

After integrating Power Systems into SoftLayer's cloud to run Watson big data services, IBM is also making middleware offerings such as WebSphere available to SoftLayer. This move will enable software developers to build hybrid cloud apps.

We believe these initiatives will improve IBM's top-line growth, going forward. The company expects to earn $7.0 billion in revenues from cloud-based services by 2015-end.

Moreover, we believe continuing investments in cloud computing, smarter planet initiative and analytics division will boost software and services revenues, going forward. These investments are expected to deliver at least $50 billion in revenues by fiscal 2015.

RBS to Axe 30,000 Jobs

As part of its restructuring activities, The Royal Bank of Scotland Group plc (NYSE:RBS-Free Report) is set to eliminate a minimum of 30,000 employees in its investment banking division and international operations in the coming three to five years. The figure represents 1/4th of its existing staff.

The latest move is in compliance with the regulatory demands that require this 81% government owned bank to focus more on core domestic retail and commercial banking business and trim down its investment banking business that has high risk exposures. The bank is now expected to put emphasis on three major groups that comprise – retail customers, small enterprises and large business houses in UK.

The downsizing should not come as a surprise as the bank, which was bailed out with £45 billion by the government during the financial crisis, is striving for growth with cost reduction initiatives, increased focus on markets where it has a strong presence and long-term growth prospects and improving its capital ratios.

Moreover, the U.K finance minister George Osborne is aiming for Royal Bank of Scotland to come in line with Lloyds Banking Group plc (NYSE:LYG-Free Report), another government backed financial institution that focuses more on domestic lending and has least exposure to the investment banking business. Lloyds Banking is expected to be fully private owned in one year down the line, while Royal Bank of Scotland may take three to five years.

Notably, in Jan 2014, Royal Bank of Scotland announced the vending of its U.S. retail business - Charter One Bank owned by its division RBS Citizens Financial Group to U.S. Bancorp (NYSE:USB-Free Report). The proposed layoff figure includes this retail unit that employs 18,300 staff members.

Further, in February, Royal Bank of Scotland announced that it would sell certain assets and liabilities in its Structured Retail Investor Products & Equity Derivatives to Paris-based BNP Paribas SA (OTC:BNPQY-Free Report). The move came as part of its strategy announced in June 2012 to reduce its equity sales and trading operations.

At a time when Royal Bank of Scotland is burdened with numerous litigations, we remain encouraged by its restructuring initiatives as these will pave the way for sustainability and growth in the long run.

Royal Bank of Scotland is scheduled to report its fourth quarter and 2013 results on Feb 27.  Currently, the company holds a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

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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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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