The Zacks Analyst Blog Highlights:Walt Disney, News Corp., Time Warner,
Priceline.com and Expedia
CHICAGO, Nov. 1, 2012
CHICAGO, Nov. 1, 2012 /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 Walt Disney Company
(NYSE:DIS), News Corporation (Nasdaq:NWSA), Time Warner Inc. (NYSE:TWX),
Priceline.com Inc. (Nasdaq:PCLN) and Expedia Inc. (Nasdaq:EXPE).
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Here are highlights from Wednesday's Analyst Blog:
Disney to Buy Lucasfilm
mid a difficult operating environment, The Walt Disney Company (NYSE:DIS)
continues to deploy its capital toward its core strategies, which include
enhancing the portfolio of its globally recognized brands, to drive long-term
growth. One such move is the company's recent agreement to acquire Lucasfilm
Disney agreed to acquire George Lucas' Lucasfilm Ltd. for a cash and stock
deal worth $4.05 billion. Disney stated that it will pay half of the amount in
cash and will issue 40 million shares on closure.
Walt Disney is one of the world's largest diversified entertainment companies
and commands a formidable portfolio of globally recognized brands, primarily
its namesake brand – Walt Disney, followed by ABC, ESPN, Pixar and Marvel
Entertainment. These renowned brands offer a strong competitive edge to the
company and bolster its well-established position in the market against major
players like News Corporation (Nasdaq:NWSA) and Time Warner Inc. (NYSE:TWX).
As per the agreement, Disney will get hold of Lucasfilm, including its
renowned 'Star Wars' and Indiana Jones franchises. Further, Disney will also
acquire the operating businesses of the company, including live-action film
production, animation, visual effects, consumer products and audio post
production. Moreover, Kathleen Kennedy, the current Co-Chairman of Lucasfilm,
will be the President of Lucasfilm.
We believe the acquisition will not only fortify Disney's position but will
also expand its world-class portfolio of content while creating long-term
opportunities by driving revenue growth through its multiple platforms, which
include theme parks, consumer products, media networks and studio
We maintain a long-term Neutral recommendation on the stock. Moreover, Disney
currently retains a Zacks #3 Rank, which translates into a short-term Hold
Earnings Preview: Priceline.com
Priceline.com Inc. (Nasdaq:PCLN) is scheduled to announce its third-quarter
2012 results on November 1, 2012. We witness no movement in analyst estimates
in the build-up to the release.
Priceline's second quarter was quite good, with earnings beating the Zacks
Consensus by 51 cents, attributable to strong revenue growth, strong
international bookings growth, as well as higher margins.
Revenue for the quarter was up both sequentially as well as from the year-ago
quarter, driven by strong volumes across the business, with hotel room nights,
rental car days and airline tickets, all growing sequentially. Room nights and
rental car days were also up strong double-digits from last year, although
airline tickets were flat.
The gross margin was also up 402 basis points (bps) sequentially and 774 bps
year over year, attributable to higher volumes in the international business,
helped by better pricing in the U.S.
(Detailed earnings results can be viewed in the blog titled: Priceline Shares
Feel Macro Pressure)
Third Quarter Guidance
Priceline expects total gross bookings to grow in a range of 10–18% year over
year, with international bookings growing 12–20% (up 23–31% on local currency
basis) and domestic bookings growing around 5%. This is expected to yield a
year-over-year revenue increase of 9–15% ($1.63 billion at the mid-point).
Pro forma EPS is expected to be in a range of $11.10–$12.10, while GAAP EPS is
estimated in a range of $10.21 to $11.21.
Agreement of Analysts
Out of the 11 analysts providing estimates, none revised their estimates for
the third quarter as well as for fiscal 2012 in the last 30 days.
Priceline's revenue has increased double-digits over the past few quarters and
the analysts expect the trend to continue in the upcoming quarter. They expect
a healthy third quarter, with earnings coming in at the higher end of the
guidance, on strong room night growth, industry data and strong results from
Expedia Inc. (Nasdaq:EXPE).
The analysts see potential for accelerated share gains, helped by the
extension of Booking.com and Agoda brands into new markets. They contend that
International bookings growth will remain strong in 2012 and Booking.com will
continue to take meaningful share of the European hotel market.
However, the analysts remain cautious about the higher domestic airfares,
weakening hotel metrics and overall headwinds in Europe. They expect third
quarter guidance to be impacted by unfavorable foreign currency movements and
Magnitude of Estimate Revisions
In the past 30 days, the Zacks Consensus Estimate remained unchanged for the
third quarter as well as for fiscal 2012 at $11.47 and $28.85, respectively.
Over the 90-day period, the Zacks Consensus Estimate was down 87 cents for the
third quarter and by $1.05 per share for fiscal 2012.
We expect Priceline to report a decent third quarter, with strong execution
and strength in the hotel business, driven by share gains and new businesses.
Though the overall trends look extremely strong, we remain a little concerned
about the headwinds in Europe. We also believe that Airline tickets will
likely remain a weak spot due to continued capacity cuts and price hikes.
Longer term, we believe that Priceline remains well positioned to sustain its
growth as consumers now prefer the Internet for making travel plans and seek
the benefit of discounted prices offered by ecommerce companies like
Priceline, rather than the time consuming offline ways.
Additionally, Priceline is expected to continue investing in the business to
push growth further and especially to continue its international expansion
strategy. This is likely to result in some downward pressure on earnings.
Priceline retains a Zacks #4 Rank, which translates into a short-term Sell
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