For Immediate Release
Chicago, IL - April 23, 2012 - Zacks Equity Research highlights
CBS Corporation
(
CBS
) as the Bull of the Day and
Dril-Quip, Inc.
(
DRQ
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Netflix Inc.
(
NFLX
),
Amazon.com Inc.
(
AMZN
) and
Verizon Communications
(
VZ
).
Full analysis of all these stocks is available at
http://at.zacks.com/?id=2678
.
Here is a synopsis of all five stocks:
Bull of the Day
:
CBS Corporation's
(
CBS
) fourth-quarter 2011 earnings of $0.57 per share surpassed the
Zacks Consensus Estimate of $0.53 and surged 23.9% from $0.46
earned in the year-ago quarter buoyed by growth in high margin
operations and cost-containment efforts. The quarter saw a step up
in both the advertising marketplace as well as profitable content
deals.
Management remains confident about continued growth momentum in
fiscal 2012. However, the significant potential risk is CBS's high
dependence on advertising revenue, which is driven by the health of
the economy. To mitigate this, the company is striving to add
diverse revenue streams to hedge against economic cycles, which
include retransmission, affiliate and online distribution fees.
Further, CBS's substantial liquidity, positions it to drive
future growth and enhance shareholders return. Currently, we
maintain our Outperform recommendation on the stock.
Bear of the Day
:
We are downgrading our recommendation on
Dril-Quip, Inc.
(
DRQ
) to Underperform from Neutral. The company remains exposed to the
highly volatile oil and gas sector fundamentals.
We remain concerned about company-specific risks, which include
new product growth challenges and potential backlog losses.
Additionally, delays in deepwater infrastructure awards may also
hinder the growth prospect of Dril-Quip.
The company has also exhibited restricted growth in the past few
quarters and we remain cautious going forward. However, increased
deepwater activity over the near term, recent capacity additions in
Brazil and Singapore, as well as ongoing capacity expansions could
prove beneficial over time.
Latest Posts on the Zacks
Analyst Blog
:
Earnings Preview: Netflix
Netflix Inc.
(
NFLX
) is scheduled to release its fiscal first-quarter 2012 results
after the closing bell on Monday, April 23, 2012. In the run up to
the earnings results, no substantial movement in analysts'
estimates for the quarter was noticed.
For the current quarter, management expects loss per share to be
in the range of 49 cents to 16 cents. The Zacks Consensus EPS
Estimate is pegged at a loss of 27 cents per share. Net loss is
expected to be in the range of $27.0 million to $9.0 million.
Domestic and International revenue is expected to be in the
range of $496.0 million to $511.0 million and $38.0 million to
$44.0 million, respectively. Domestic DVD revenue is expected to be
in the range of $308.0 million to $322.0 million for the first
quarter of 2012. For the quarter, the Zacks Consensus Estimate
projects Netflix to earn revenues of $867 million.
Management expects subscribers in the consolidated domestic
market and in the international market to range from 22.8 million
to 23.6 million and from 2.5 million to 3.1 million, respectively.
The U.S. DVD subscriber base is expected to be in the range of 9.4
million to 10.0 million.
Management expects the subscriber growth to be negatively
impacted by increasing attrition rate in the DVD segment. However,
management expects strong growth in streaming customer base in both
US and International in 2012.
Estimates Trend Revision
Over the past 30 days, none of the 28 analysts covering the
stock revised their estimates for the quarter. Thus, the Zacks
Consensus Estimate for the first quarter is been pinned at a loss
of 27 cents per share.
Analysts covering the stock expect the video streaming market to
be competitive for Netflix with some of the bellwethers like
Amazon.com Inc.
(
AMZN
), HBO and
Verizon Communications
(
VZ
) entering the arena. Moreover, content costs are on the rise with
the company going for new agreements with production houses to
enhance its content library. Additionally, analysts opine that the
international expansions (UK and Latin America) could take time to
be profitable.
However, analysts also believe that continued subscriber
additions could somewhat offset the lower profitability in the near
term.
Our Take
We note that Netflix has performed consistently during the last
4 quarters with its average earnings surprise being 18.02%. For the
to-be-reported quarter we expect the company to beat the Zacks
Consensus by the same magnitude.
Netflix's offering of new and exclusive content to its
subscribers are its biggest USP compared to some of its closest
peers. Apart from recent movies and documentaries, Netflix is also
boosting its original content portfolio to entice new subscribers
in the US market and international market.
However, higher capital expenditure due to international
expansion will hurt earnings growth in the near term, in our view.
Moreover, when compared to some of its cable and communications
peers that have diversified revenue and cash flow streams, Netflix
relies solely on streaming for future growth, as its DVD rental
business continues to lose subscribers.
We believe that the streaming market is getting overcrowded and
this will hurt Netflix's margins going forward. We provide a word
of caution to investors in this respect.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649
.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two
stocks that are likely to outperform (Bull) or underperform (Bear)
the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the
Analyst Blog
provides analysis from Zacks Equity Research about the latest news
and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and
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which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150
publicly traded stocks. Our analysts are organized by industry
which gives them keen insights to developments that affect company
profits and stock performance. Recommendations and target prices
are six-month time horizons.
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AMAZON.COM INC (
AMZN
): Free Stock Analysis Report
CBS CORP (
CBS
): Free Stock Analysis Report
DRIL-QUIP INC (
DRQ
): Free Stock Analysis Report
NETFLIX INC (
NFLX
): Free Stock Analysis Report
VERIZON COMM (
VZ
): Free Stock Analysis Report
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