Zacks Analyst Blog Highlights: Medallion Financial, Credit Suisse and AXA.

CHICAGO -- 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: Medallion Financial (Nasdaq:TAXI), Credit Suisse (NYSE:CSR) and AXA (NYSE:AXA).

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2673

Here are highlights from Wednesday's Analyst Blog:

Medallion Financial Downgraded

We are downgrading shares of Medallion Financial (Nasdaq:TAXI) to a Sell at this time, as valuation looks very full to us.

- Absolute valuation looks stretched at 1.38 times net asset value.

- Its closed-end fund structure limits book value growth through capital retention.

- PEG ratio is 1.51, a 10% premium to the 1.37 median for the peer group.

- On a price-to-book basis, the 9% premium looks very full given an ROE 18% below median.

- On a yield basis, shares of TAXI currently yield 4.8%, which is lower than any of the peers in the peer group we have chosen and 52% below median.

Operating as a RIC means that book value growth will be much slower over time, and that share appreciation should be similarly limited. An investment in TAXI is likely to generate more in the way of dividends (generally taxed as income) than in share appreciation (which can be deferred and taxed as capital gains). We believe this limits the attractiveness of the shares to certain investors, and reduces demand overall.

Operationally, though, things appear to be progressing very well, and NYC medallion values have never been higher. Management seems to be executing well, and the dividend continues to grow. Leverage continues to trend upward, as management believes that TAXI is under-levered relative to peers. We expect solid loan growth as TAXI increases penetration in the medallion and commercial loan markets and from bulk loan purchases (such as the $35 Mn purchase in March). Operating leverage has also been a positive contributor.

CSR Sells Insurance Biz to AXA

Today, Credit Suisse (NYSE:CSR) announced that it had entered into a definitive agreement to sell Winterthur Swiss Insurance Company (Winterthur), its insurance business, to AXA (NYSE:AXA) for CHF12.3 billion (US$10.0 billion), with the transaction expected to close by the end of the year. The transaction had been widely expected as Credit Suisse had been managing Winterthur as a financial investment for the last two years, in preparation for sale or a capital markets flotation.

CSR will record a gain of roughly CHF2.9 billion (US$2.3 billion), based on Winterthur's book value of CHF9.4 billion (US$7.6 billion) as of March 31, 2006. Proceeds from the sale of Winterthur will be used for organic growth opportunities and selected acquisitions and joint ventures in investment banking, private banking, and asset management, though no major acquisitions are envisioned.

At the same time, Credit Suisse confirmed its 2007 net income target of CHF8.2 billion (US$6.6 billion), assuming a stable market environment. CSR's current CHF6 billion (US$4.9 billion) common stock repurchase program will continue and is expected to be completed in the first half of 2007.

The stock is up $1.62, or over 3%, to $51.69 in morning trading. We continue our Buy recommendation on Credit Suisse.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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