Investors Fin. Services (IFIN)

SSG and PERT A (07-14-2005) | Google Stocks | Company Website

At the Q2 press conference on July 14, Investors Financial Services Corp. (IFIN) revised is earnings guidance downward for 2005 (10%), 2006 (8-10%), and 2007 and beyond (12-14%). See Q2 press release.

We previously had used 16% in our projections for June. The reduced earnings guidance is due in part to reduced interest income. A revised SSG, using 12% expected EPS growth, shows a projected average return PAR of 14.2% and a buy up to $48. However, given the company’s lowered guidance, the may be a stock to consider replacing.

Note: IFIN’s price dropped 17% on July 15 on announcment of the lowered guidance. The SSG was revised after the announcement using a projected EPS growth of 10% and the lowered price. The new projected average return is 15.51%. See revised SSG (07-15-2005). This certainly suggests some efficiency in the market.

The June Investor Advisory Service by IClub had reported IFIN a buy as well:

Investors Financial Services had a surprisingly slow quarter. First quarter revenue grew 8% with core services revenue growth of 16% being partially offset by an 11% drop in ancillary services revenue. EPS rose 11%, but a securities gain in 2005 and a one-time prepayment penalty in 2004 accounted for all of the apparent growth. The company obtained almost 30% of its revenue from net interest income. An analysis of its balance sheet shows that customers are withdrawing low-cost demand and savings deposits while Investors Financial adds to more expensive funding sources like time deposits and borrowed money. The concern is that it must exercise great care to avoid getting pinched by rising interest rates. IFIN (42.74) is a buy up to 65.

Company Description: Investors Financial Services Corp., through its wholly owned subsidiary, Investors Bank & Trust Company, provides asset administration services for the financial services industry in the United States, Canada, Cayman Islands, and Ireland. It offers global custody, multicurrency accounting, and mutual fund administration, as well as various value-added services, such as securities lending, foreign exchange, cash management, performance measurement, institutional transfer agency, investment advisory services, lines of credit, middle office outsourcing, and brokerage and transition management services. The company’s customers consist of financial asset managers, including mutual fund complexes, investment advisors, family offices, banks, and insurance companies. Has 2413 employees. Chairman & C.E.O.: Kevin J. Sheehan. Inc.: DE. Address: 200 Clarendon Street, P.O. Box 9130, Boston, MA 02116. Tel.: (617) 937-6700. Internet: http://www.investorsbnk.com.