Zacks Analyst Blog Highlights: Bank of America, MGIC, Fannie Mae, Freddie Mac and Gymboree Corp.

CHICAGO - (BUSINESS WIRE) - 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: Bank of America (NYSE: BAC), MGIC (NYSE: MTG), Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE) and Gymboree Corp. (Nasdaq: GYMB).

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Here are highlights from Thursday's Analyst Blog:

Mortgage Delinquencies: Record High

The delinquency rate is going up much faster than foreclosures are being started. With unemployment high and rising, it is hard to see a lot of those delinquencies getting cured. Either the lenders will have to let people live indefinitely in their houses without paying (unlikely that the banks would be so generous) or we will see another huge wave of foreclosures coming.

The absolute number of houses that are either in foreclosure or 90 days or more past due now exceeds the number of existing homes available for sale. That is a huge overhang of shadow inventory (although some of it is out of the shadows and currently listed for sale) that should continue to put pressure on housing prices, even with all the extraordinary government support trying to prop up housing prices.

While unemployment is one serious driver of mortgage foreclosures because it affects the ability to pay, falling home prices are another driver. An underwater home is a home that is at high risk of going into foreclosure. It is simply economically irrational to continue to make payments on a $500,000 mortgage that is secured by a property that is only worth $400,000. This, then, continues the vicious cycle, where falling prices lead to foreclosures, which leads to more distressed supply, which leads to further pressure on home prices that in turn leads to yet more foreclosures.

The entire mortgage complex is not yet out of the woods. That complex includes the big banks like Bank of America (NYSE: BAC), the mortgage insurers like MGIC (NYSE: MTG) as well as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). My inclination is to avoid all of them.

Gymboree Beats, but Outlook Down

The Gymboree Corp. (Nasdaq: GYMB) reported its fiscal third quarter results after the closing bell on Wednesday. The company posted earnings of $34.8 million, a growth of 12.6% from $30.9 million recorded in the year-ago period. Earnings per share came in at $1.15, which topped the Zacks Consensus Estimate of $1.13.

Gymboree is a specialty retailer offering apparel and accessories for children under the Gymboree, Gymboree Outlet, Janie and Jack and Crazy 8 Brands, as well as play programs under the Gymboree Play & Music brand. At the end of October 2009, the company operated a total of 951 stores across the U.S., Canada and in Puerto Rico.

The company reported a nearly 2% increase in total sales to $269.1 million during the quarter, compared to $264.1 million in the year-ago quarter. The expansion was primarily driven by the addition of 78 new stores in the last one year period, partially offset by a 4% decline in same-store sales. During the quarter, the company opened a total of 25 new stores including six Gymboree stores, four Gymboree Outlets and 15 Crazy 8 stores.

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