) owned NBCUniversal's Orlando Theme Park business is expected to
witness increased footfall with the inauguration of the new Diagon
Alley on Jul 8, 2014.
Universal's new Diagon Alley resembles the shopping area of the
same name in J.K. Rowling's popular series - Harry Potter. The
attraction will feature a fire-breathing dragon on top of Gringotts
Bank at the end of the alley. The main appeal of the alley lies in
the roller coaster ride named "Harry Potter and the Escape from
Gringotts," again an inspiration from the movie. The place will
also boast several restaurants and shops where one can eat and buy
Harry Potter movie souvenirs.
The inclusion of Diagon Alley in Universal Orlando's Harry Potter
world - which replicates Hogsmeade and was opened in 2010 - is a
positive for the company and is expected to drive revenues going
forward. Moreover, the company plans to add the Diagon Alley
attraction to its Hollywood Theme Park in 2016 which will further
boost the company's business, in our view.
As Hogsmeade and Diagon alleys have been built in separate
Universal parks, customers need to buy two passes for a total value
of $136 (exclusive of taxes). A train named Hogwarts Express -
similar to the one mentioned in the Harry Potter series - will take
the guests to both the locations.
In the recently concluded first quarter of 2014, Theme Parks
revenues totaled $487 million, up 5.4% year over year. NBCUniversal
has decided to add new attractions to its theme parks going ahead.
In the reported quarter, the operating expenses for Theme Parks
grew 9.5% year over year.
Comcast has also entered into a 50-50 partnership with
Lowe's Companies Inc.
) to construct Cabana Bay Beach Resort with 1,800 rooms on the
Universal complex. Scheduled to open by the end of this year, the
Cabana Bay Beach project will raise the hotel room count at
Universal by 75%, bringing the figure to 4,200.
On the down side, we believe that the company should have opened
the Diagon Alley in the month of May and June when most schools and
colleges closed for the summer vacation. Theme Park businesses are
cyclic in nature and therefore, the timing of the launch is very
important to draw huge crowds.
Currently, Comcast carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks in the same industry, which warrant a look,
Shaw Communications Inc.
Cablevision Systems Corporation
). Both the stocks have a Zacks Rank #2 (Buy).
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