The Zacks Analyst Blog Highlights:Netflix, Walt Disney, Comcast and AT&T
CHICAGO, Feb. 27, 2014 /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 Netflix Inc. (Nasdaq:NFLX-Free Report), Walt Disney (NYSE:DIS-Free Report), Comcast Corp (Nasdaq:CMCSA-Free Report) and AT&T (NYSE:T-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Netflix Offers Final 5 "Breaking Bad" Episodes
Netflix Inc. (Nasdaq:NFLX-Free Report) recently started streaming the final episodes of AMC's Breaking Bad 5. The season finale received great response primarily due to the buzz created by the availability of all the past seasons on Netflix, prior to the start of the final installment.
Netflix has also secured rights to stream new episodes of a spin-off of the Breaking Bad series called Better Call Saul, which will debut on AMC in Nov 2014. The new series is expected to premiere on Netflix by late 2014, reflecting the company's continuing focus on improving customer engagement.
This has been the primary reason behind its success in the recent times. Netflix added 11.07 million paid streaming subscribers over the last 12 months. Total streaming subscriber base increased 11.08 million year over year to 44.35 million, primarily driven by expanding content portfolio that includes original and popular productions such as Arrested Development and House of Cards.
Over the last one year, Netflix has entered into partnerships with major film studios and production houses, which include names such as DreamWorks Animation, The Wachowskis (creators of The Matrix trilogy), J. Michael Straczynski (Babylon 5), Gaumont International, Sony Pictures, The Weinstein Company (TWC) and Walt Disney (NYSE:DIS-Free Report).
These deals have helped Netflix to not only increase its content portfolio, but also to move into new segments such as comedy, political thrillers, autobiographies and horror.
To further improve subscriber engagement, Netflix recently announced a multi-year partnership with Comcast Corp (Nasdaq:CMCSA-Free Report). According to Bloomberg, Netflix will pay an undisclosed fee to directly access Comcast's broadband network.
The partnership will improve streaming quality for subscribers on Comcast network, which have been falling for some time due to excessive traffic jam. Netflix is also expected to partner other major carriers such as AT&T (NYSE:T-Free Report) and Verizon, which will further improve net speeds providing superior streaming quality to its subscribers.
Although this additional cost will increase operating expenses, we believe the availability of popular shows, such as Breaking Bad, along with high quality streaming will rapidly drive Netflix's subscriber base and revenues in 2014.
Moreover, this will improve Netflix's competitive position against the likes of Amazon Prime and HBO, going forward. Nevertheless, rising content costs remains a significant headwind.
Currently, Netflix sports a Zacks Rank #2 (Buy).
Disney Raises Theme Park Ticket Prices
The Walt Disney Co (NYSE:DIS-Free Report) has increased ticket prices of its Orlando-based Walt Disney World Park for the second time in last eight months. The company had last hiked prices in Jun 2013.
The hike comes as a surprise as Disney generally raises its ticket prices during May-June, when the schools close. The ticket price per person now stands at $99, up more than 4% from last year. The company also announced price hikes for its other theme parks namely Epcot, Animal Kingdom and Hollywood Studios. These theme parks will now charge $94 per person, up from $90 earlier.
The early hike could possibly be stemming from the fact that this year, Easter will fall on April 20 in the third quarter. Hence, to meet revenue targets for the second quarter, management has likely raised the ticket prices.
During last earnings release, Management was expecting operating income at Parks and Resorts to fall by $45 million in the second quarter as the shift of one week will place the Easter holiday entirely in the third quarter. In the first quarter of fiscal 2014, Parks and Resorts revenues rose 6% to $3,597 million, while the segment's operating income increased 16% to $671 million.
With Disney increasing ticket prices, we are likely to see upward price revisions in other theme parks, notably, Universal Studios Florida and LEGOLAND Florida among others.
Another recent development at Disney was that The Walt Disney Studios launched its cloud-oriented digital movie service "Disney Movies Anywhere." This app compatible with iPhone, iPad and iPod touch, will allow consumers to find out, buy, manage, and watch any movies from Disney, Pixar, and Marvel studios at their convenience.
Currently, Disney sports a Zacks Rank #2 (Buy).
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