The Zacks Analyst Blog Highlights: Yahoo, Comcast, Netflix, Microsoft and Time Warner Cable

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Oct 15, 2013, 09:30 ET

CHICAGO, Oct. 15, 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 the Yahoo Inc. (Nasdaq:YHOO-Free Report), Comcast Corporation (Nasdaq:CMCSA-Free Report), Netflix, Inc. (Nasdaq:NFLX-Free Report), Microsoft Corp. (Nasdaq:MSFT-Free Report) and Time Warner Cable Inc. (NYSE:TWC-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Will Yahoo (YHOO) Beat Earnings Estimates?

Yahoo Inc. (Nasdaq:YHOO-Free Report) is set to report third-quarter 2013 results on Oct 15. Last quarter, it posted a 15.38% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Yahoo's second-quarter earnings exceeded the Zacks Consensus Estimate by 5 cents driven by its equity holdings in Alibaba and Yahoo Japan. However, GAAP revenues of $1.14 billion were down sequentially as well as year over year. Margins expanded both sequentially as well as from the year-ago quarter due to solid expense management and a favorable mix.

Yahoo provided a tepid outlook for the third quarter, with revenues expected to be within $1.12-1.17 billion, adjusted EBITDA of $330-$350 million and operating income of $165-$185 million.

Earnings Whispers?

Our proven model does not conclusively show that Yahoo will beat earnings this quarter. That is because a stock needs to have both a positive earnings expected surprise prediction or Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The Most Accurate estimate stands at 24 cents while the Zacks Consensus Estimate is higher at 27 cents. That is a difference of -11.11%.

Zacks Rank #3 (Hold): Yahoo's Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Comcast, Twitter Join Forces

Comcast Corporation (Nasdaq:CMCSA-Free Report) – the largest cable MSO in the U.S. – recently collaborated with online social networking giant Twitter, Inc. to help the former's subscribers to watch popular TV shows and purchase movie tickets from a tweet.

This service will be available to Comcast's Xfinify TV online service customers. The subscribers can easily access these facilities through gadgets like TV, PCs, smartphones and tablets.

Twitter users will find a 'see it' button through which they will be directed to their favorite TV shows. Moreover, they can also buy movie tickets through Fandango.

Twitter also plans to provide the new facility to other TV network operators in the upcoming months. Thus, we believe that availability of such applications will certainly boost the popularity of particular TV shows.

Higher proliferation of smartphones and tablets coupled with stiff competition from other cheaper video streaming companies like Netflix, Inc. (Nasdaq:NFLX-Free Report) and Hulu has induced Comcast to continuously launch such innovative products.

Comcast is gradually deploying its next-generation Xfinity TV, an on-demand, Web-based service, for subscribers who will have access to both video programming and the Internet. The new Xfinity TV set-top box has an innovative system to quickly navigate between live and on-demand programming.

Comcast also launched its innovative Xfinity Streampix, a subscription based on-demand video streaming service. This is an enhancement of the company's pay-TV offerings, which currently provide traditional TV shows and Xfinity on-demand shows for TV sets and broadband devices.

Comcast also entered into an agreement with Microsoft Corp. (Nasdaq:MSFT-Free Report) to enable its subscribers to access Xfinity TV online content from the Microsoft Xbox. Xfinity TV currently covers 95% of the company's footprint.

Hence, we believe that the launch of such advanced services will not only drive subscriber growth but will also allow the company to safeguard its position against major cable and satellite TV operators like Time Warner Cable Inc. (NYSE:TWC-Free Report), Dish Network and DIRECTV.

Currently, Comcast Corporation carries a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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