The Zacks Analyst Blog Highlights: Discovery Communications, Scripps Networks Interactive, Amazon.com, Time Warner Cable and JetBlue Airways

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Dec 12, 2013, 09:30 ET

CHICAGO, Dec. 12, 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 theDiscovery Communications Inc. (Nasdaq:DISCA-Free Report), Scripps Networks Interactive Inc. (NYSE:SNI-Free Report), Amazon.com (Nasdaq:AMZN-Free Report), Time Warner Cable Inc. (NYSE:TWC-Free Report) and JetBlue Airways Corporation (Nasdaq:JBLU-Free Report).

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Here are highlights from Wednesday's Analyst Blog:

Another Consolidation in the Offing

Yesterday, VARIETY reported thatDiscovery Communications Inc. (Nasdaq:DISCA-Free Report) is considering a bid to acquire Scripps Networks Interactive Inc. (NYSE:SNI-Free Report). This is reflective of the growing consolidation trend in the cable TV operators industry. This trend might soon be adopted by the TV content producing industry. However, neither Discovery nor Scripps Networks have confirmed this report.

We believe a merger between Discovery and Scripps Networks will be significantly beneficial for both entities. Discovery has a diversified content network. Its flagship Discovery channel is known as a nature channel. Similarly, Animal Planet is a wildlife channel.

The company has a military channel, an ownership interest in Oprah Winfrey Network and has recently acquired the SBS Nordic operations of Prosiebensat.1 Media AG. Moreover, Discovery is highly geographically diversified in more than 200 countries with over 100 TV networks.

On the other hand, Scripps Networks is a pure-play lifestyle TV network consisting of six channels. All these cable channels have loyal audiences, who also view the company's content in several non-TV platforms.

This helps Scripps Networks to explore the non-TV verticals, such as magazines (print media) and websites (Internet). The company also acquired Asian Food Channel, a leading food-focused pay-TV network in Asia.

Additionally, both the companies are gradually depending on the video streaming or the TVEverywhere platform. Scripps Networks has a content licensing deal with Amazon.com (Nasdaq:AMZN-Free Report) through which its popular TV channels are available on Amazon's subscription-based video streaming service – Prime Instant Video. Discovery recently renewed its agreement with Time Warner Cable Inc. (NYSE:TWC-Free Report) to offer Discovery's content on the TVEverywhere platform of the latter.

Current Zacks Consensus Estimate revision trend is indicating 7.2% revenue growth and 12.3% earnings per share growth year over year in 2014 for Scripps Networks. Similarly, these figures are expected to rise 11.5% and 28.2% year over year, respectively.

We believe that this favorable market trend raised the stock prices of Scripps Networks and Discovery by 14.5% and 1.2%, respectively, in the aftermarket trade on Nasdaq. Currently, both Discovery and Scripps Networks have a Zacks Rank #3 (Hold).

Better November Traffic for JetBlue

JetBlue Airways Corporation (Nasdaq:JBLU-Free Report) displayed better traffic across its network for the month of Nov 2013. The carrier reported airline traffic – measured in revenue passenger miles or RPMs – of 2.70 billion, up 0.9% year over year. Consolidated capacity (or available seat miles/ASMs) was also up 5.1% year over year at 3.45 billion.

The load factor or percentage of seats filled by passengers, however, was 78.3%, down 320 basis points. Passenger revenue per available seat mile (PRASM) decreased 2% year over year. The company registered a completion factor of 99.6%, with on-time performance of 84.8%.

For the first eleven months of 2013, JetBlue Airways generated RPMs of 32.60 (up 6.2% year over year) and ASMs of 38.92 billion (up 6.6% year over year), on a consolidated basis. At Nov end, load factor was 83.8%, reflecting a decline of 30 basis points from the corresponding prior-year period.

We expect JetBlue to sustain traffic growth in the coming days based on increasing travel demand, network expansion, fleet re-designing, optimization of unit revenues, capital expenditure management and disciplined growth. The company's growing presence in key markets and penetration into untapped arenas will support its momentum.

The airline also entered into an interline ticketing agreement with Silver Airways which offers the highest number of flights in Florida and the Bahamas. JetBlue is also vying to get a share of the slots at Washington Reagan National Airport, which is a stipulation in the merger between U.S. Airways and American Airlines. These initiatives are expected to boost performance going forward.

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