Zacks Analyst Interview Highlights: Freddie Mac, Countrywide Financial and PMI Group

Business Wire, Sept 17, 2007

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Neena Mishra, who discusses Freddie Mac (NYSE: FRE), Countrywide Financial (NYSE: CFC) and PMI Group (NYSE:PMI).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Are there any oversold areas in finance that perhaps are not fundamentally affected by the credit markets, and thus may be good values at this time?

We agree that some of the financial stocks that are fundamentally strong have fallen due to the negative sentiment affecting the market. However, we do not think that the time is right as yet to view these as good values.

Do you have any stand-out Buy or Sell recommendations currently?

We are moderately bullish on Freddie Mac (NYSE: FRE), as we do expect that the continued deterioration in the mortgage market will support Freddie and Fannie as providers of liquidity. We may also see some easing of the portfolio caps.

We are bearish on Countrywide Financial (NYSE: CFC). The company will continue to face increased challenges in the availability and cost of credit. Another company we are less than positive on is PMI Group (NYSE:PMI), which is a provider of insurance to mortgage lenders.

While CFC got some respite from the $12 billion additional financing secured by it, we think that its liquidity problems are far from over. Further, as the terms of the financing have not been disclosed by the company, we are unable to derive much comfort from this development. The company may also have to take substantial mark-to-market losses during the third quarter, on the loans which it had to hold on its balance sheet, as it could not find any buyers for them.

How would you advise investors deal with the financial markets in the relative near-term - say through the end of the year?

Hostile financing environment and continued weakness in housing markets will continue to limit any upside for the financial stocks. We expect the weakness in this sector to continue well into 2008. For the lack of visibility at this point of time, we will advise the investors to avoid the financial sector in the near term.

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