The Zacks Analyst Blog Highlights: Netflix, Facebook, Amazon, Comcast and Guess?

Mar 19, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, March 19, 2013 /PRNewswire/ -- 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 Netflix (Nasdaq: NFLX), Facebook (Nasdaq: FB), Amazon (Nasdaq: AMZN), Comcast (Nasdaq: CMCSA) and Guess? Inc. (NYSE: GES).


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Here are highlights from Monday's Analyst Blog:

Netflix Goes Social in US

Netflix (Nasdaq: NFLX)has decided to extend its social features to its US subscribers. The streaming services provider announced new features that will enable US subscribers to link their Netflix accounts to Facebook (Nasdaq: FB).

The integration not only allows Netflix subscribers to see their friends' choices but also share their choice of favorite movies and videos on Facebook. In order to do so, subscribers are required to add "Friends' Favorites" and "Watched by your friends" rows to their Netflix interface.

Netflix has been providing the Facebook integrated service to its international customers in Canada and Latin America over the last one year. However, the Video Privacy Protection Act of 1988 prevented Netflix from offering the service to US customers.

The Act passed in 1988 protects consumer privacy against a specific form of data collection. The Act prevented disclosure of personally identifiable rental records of "pre-recorded video cassette tapes or similar audio visual material". However, in late 2012, the United States Congress passed a bill, which removed the restrictions under the Act.

The integration is expected to be beneficial for both Netflix and Facebook going forward. The integrated service is expected to boost customer engagement, thereby boosting Netflix's subscriber base going forward. Meanwhile, Facebook can use viewer's choice data to target relevant ads.

However, we believe that Netflix will not be the sole gainer from the newly-amended Act. Netflix competitors such as Hulu will also benefit from the new rules as it already began offering Facebook integration to its user's way back in 2011.

In such a scenario, we believe that Netflix's superior content will be the ultimate deciding factor in the ongoing battle for online supremacy. Netflix's new and exclusive content offerings to its subscribers are the company's biggest USP compared to its closest peers, Hulu, HBO, Amazon (Nasdaq: AMZN)as well as the newly-launched services from cable and media companies such asComcast (Nasdaq: CMCSA).

We believe that improving paid subscriber base, international expansions, diversified content portfolio and a huge video library are the positives in the near term. Moreover, Netflix's own content delivery network, Open Connect, connects its video library directly to Internet service providers, ensuring fast data transfer to enhance customer experience. This will further improve customer engagement going forward.

Currently, Netflix has a Zacks Rank #2 (Buy).

Guess? To Give 4Q Answers

Guess? Inc. (NYSE: GES) is set to report fourth quarter fiscal 2013 results on Mar 20. Last quarter it posted a 2.3% negative surprise. Let's see how things are shaping up for this announcement.

Growth Factors Past Quarter

Earnings remained within the guidance range in the third quarter, but dropped from the year-ago quarter primarily due to lower comparable store sales and higher merchandise expenses. Weak business in Europe was also a dampener.

Moreover, management hinted that international losses could increase due to higher costs related to incremental marketing expenses. Macroeconomic headwinds are expected to adversely affect comps even during the fourth quarter. Promotional expenses in North America, currency headwinds and lower mix of royalties are expected to restrict earnings in the future.

Earnings Whispers?

The Zacks Consensus Estimate for the fourth quarter stands at 86 cents while that for fiscal 2013 is pegged at $2.07.

Guess? missed estimates in the second and third quarters of fiscal 2013, while it surpassed in the first quarter and fourth quarter of 2012  with a trailing four-quarter average positive surprise of 3.7%.

There has been no estimate revision in the last 60 days. As a result, the Zacks Consensus Estimate has remained unchanged for the fourth quarter as well as for 2013. Over the last 90 days, however, the Zacks Consensus Estimate for the fourth quarter of fiscal 2013 has fallen by a penny to 86 cents.

The lack of movement in estimates indicates a lack of catalysts during the quarter, meaning that the company is likely to report in line with expectations.

Moreover, the stock carries a Zacks Rank #2 (Buy).

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