The Zacks Analyst Blog Highlights: Bank of America, Fannie Mae, Freddie Mac, BB&T and Mallinckrodt

For Immediate Release
 
Chicago, IL – February 28, 2014 – 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 Bank of America Corp. (BACFree Report), Fannie Mae (FNMAFree Report), Freddie Mac (FMCCFree Report), BBT Corp. (BBTFree Report) and Mallinckrodt plc (MNKFree Report).
 
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Here are highlights from Thursday’s Analyst Blog:

BofA Challenges $2.1B RMBS Claim
 
As per a report from Reuters, Bank of America Corp. (BACFree Report) has challenged the Federal authorities’ claim of $2.1 billion as penalty. In January, the authorities had sought this amount from BofA for the sale of risky residential mortgage-backed securities (RMBS).
 
While responding to the case, BofA stated that the authorities had committed a mistake by calculating the penalty amount on the total gain from the sale of loans. As per the law, the penalty amount should be based on net gains made while selling the risky RMBS. Since the company did not make any profit from the sale, it claimed that no penalty should have been imposed on it.
 
The RMBS were sold by Countrywide Financial Corp., which was acquired by BofA in 2008, to Fannie Mae (FNMAFree Report) and Freddie Mac (FMCCFree Report) between Aug 2007 and May 2008. The company was accused of selling the loans underlying these RMBS without properly assessing the creditworthiness of borrowers.
 
The Federal prosecutors accused Countrywide of creating the program ‘high-speed swim lane’ (:HSSL) or ‘Hustle,’ which rewarded employees for the quantity rather than quality of loans. These loans were then bundled and sold to Fannie Mae and Freddie Mac.
 
Earlier, the authorities had sought a fine of nearly $864 million from BofA. However, the figure later rose to $2.1 billion, after calculation of the total revenue that was derived from the loans. Notably, U.S. District Judge, Jed Rakoff, will decide the final penalty amount after the hearing that begins on Mar 13 is over.
 
BofA continues to suffer from flaws in Countrywide’s transactions prior to the financial crisis. The company has incurred more than $40 billion in losses from bad loans, RMBS claims and lawsuits. Though BofA has settled quite a few cases pertaining to Countrywide, it is still braced with several litigations that could weigh on its financials going forward.
 
Currently, BofA carries a Zacks Rank #3 (Buy). A better-ranked major global bank worth considering is BBT Corp. (BBTFree Report), with a Zacks Rank #2 (Buy).
 
Patent Update from Mallinckrodt
 
Gaining patent protection for drugs is an essential part of the pharma and biotech sector. Companies seek strong patent protection so as to prevent the entry of generic competition for their drugs. Innovator companies often spend 10-15 years to develop a drug and bring it to market. With a lot of RD dollars invested in the development of these drugs, innovator companies look to gain exclusivity so that they can recover their investment in product development.
 
Earlier this week Mallinckrodt plc (MNKFree Report) said that the United States Patent and Trademark Office granted a patent (U.S. Patent Number 8,658,631) to Xartemis XR containing composition claims with regard to its design, formulation, pharmacokinetic and release characteristics.
 
Xartemis XR (oxycodone HCI and acetaminophen), an extended-release oral formulation, is currently under FDA review for the management of acute pain in a post-surgical model. The company said that it will launch Xartemis XR in the second quarter of fiscal 2014, provided the candidate is approved by the FDA.
 
We remind investors Mallinckrodt recently launched another pain drug, Pennsaid 2%.
 
Meanwhile, Mallinckrodt is actively focusing on strengthening its pipeline and promoting new products in the pain market. The company expects to file for approval for another pain candidate, MNK-155, in the second half of fiscal 2014.
 
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