The Zacks Analyst Blog Highlights:Zillow, SIRIUS XM Radio, Pandora Media, General Motors and Liberty Media
CHICAGO, April 22, 2013 /PRNewswire/ -- 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 Zillow Inc. (Nasdaq: Z), SIRIUS XM Radio Inc. (Nasdaq: SIRI), Pandora Media Inc. (NYSE: P), General Motors Co. (NYSE: GM) and Liberty Media Corp. (Nasdaq: LMCA).
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Here are highlights from Friday's Analyst Blog:
Zillow Upgraded to Strong Buy
Zacks Investment Research upgraded Zillow Inc. (Nasdaq: Z) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The company has witnessed rising earnings estimates since it reported solid fourth-quarter results. The company delivered positive earnings surprises in the last 3 quarters of 2012 with an average beat of 411.1%. The long-term expected earnings growth rate for this stock is 30%.
Over the last 30 days, 1 out of 3 estimates moved north, pushing the Zacks Consensus Estimate for 2013 by 2 cents.
The year-to-date return for the stock came in at 97.3%, way above NASDAQ's return of 4.9%.
The company has undertaken a number of initiatives to upgrade its services. In Feb 2013, Zillow opened a new office for Zillow Rentals and HotPads acquired in 2012 in San Francisco. In the same month it launched a dedicated rental app for iPad named Zillow Rentals. Rental shoppers using iPad can use Zillow Rentals to search via GPS by specifying a location on the map.
Again, the company enhanced its free online portal, Agent Hub in Mar 2013. The endeavor aimed to augment Zillow's efforts to convert contacts to active customers, thereby generating more revenues.
Additionally, in order to acquire more customers, the company introduced a Spanish-language support for the Zillow Rentals Android App in Mar 2013. This is expected to enhance its Spanish customer base by helping the native Spanish speakers search for rental homes with greater convenience.
Further, the company is working towards business expansion. Towards this end, Zillow partnered with Engel and Volkers, a premium residential real estate company and HUNT Real Estate ERA, the largest family-owned real estate business in New York state and Phoenix, in Feb 2013. Zillow will now market the listings of the companies through the Zillow Real Estate Network.
SIRIUS XM Upgraded to Neutral
We upgrade our recommendation on SIRIUS XM Radio Inc. (Nasdaq: SIRI) to Neutral ahead of its first-quarter 2013 financial results, which will be released on Apr 30, before the opening bell.
Why the Upgrade?
We expect the company's positive momentum with respect to revenue, margins and free cash flow to continue in the near-term. SIRIUS XM is largely dependent on the growth of the U.S. auto industry and currently holds an estimated 70% market share of the new cars sold in the face of growing competition from Pandora Media Inc. (NYSE: P) and Spotify.
In order to retain its subscriber base, the company recently introduced an innovative personalized interactive Internet radio service called "MySXM". SIRIUS XM currently has a Zacks Rank #3 (Hold).
Balanced View on SIRIUS XM
Continuous rise in auto sales led to a record subscriber growth for the company in 2012. However, management has hinted that auto sales may rise at a slower rate in 2013. According to the new deal with SIRIUS XM's major customer, General Motors Co. (NYSE: GM), the auto giant has stopped the payment of promotional money to the company. We believe that this may force SIRIUS XM to lose some paid promotional customers.
Further, SIRIUS XM lost the legal battle to counter the takeover bid from Liberty Media Corp. (Nasdaq: LMCA), which currently controls more than 50% of the company. We do not know whether there will be any change in management policy after the takeover.
On the other hand, SIRIUS XM has a very strong business relationship with the original equipment manufacturers. The company owns an extensive satellite network, covering the whole of U.S. that provides audio contents through more than 170 channels.
In Jan 2012, SIRIUS XM raised the prices of its services. Management is hopeful that its churn rate will remain more or less the same as the previous year despite the hike in price. In the fourth quarter of 2012, average self-pay monthly churn rate was 1.8% compared with 1.9% in the prior-year quarter.
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