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Published: October 19, 2012 at 07:30 AM GMT
Last Updated: October 19, 2012 at 07:30 AM GMT
Broadcast Network Ratings
Nomura's Michael Nathanson updated investors on broadcast network live ratings. Admittedly, the analyst said that early 2012/2013 network results have been "disappointing". Season-to-date broadcast P18-49 ratings for the big 4 networks are down −11% (which includes a +12% bounce back from NBC). The analyst confirmed the short term impact on advertising and profits (as well as longer term syndication pipeline). Of the media firms Nathanson covers, CBS (CBS) is most exposed to broadcast network revenue with 27% of total company revs. Investors will have to wait and see how general poor ratings will play out for the stocks.
J.P. Morgan also took a look at new products LinkedIn (LNKD) introduced at its annual Talent Connect event. LinkedIn demo'd its Talent Brand Index, a way for companies to benchmark their brand strength on the business social network. The firm is also making it easier for its recruiter clients by pre-populating its Talent Pipeline with Company Followers. The analysts emphasized the added engagement enabled by Endorsements, a feature for members to endorse specific skills of their connections (the firm is already seeing 8 million daily endorsements). JPM is positive on LinkedIn shares with a deep-seated belief that "deeper corporate penetration and increasing member engagement will drive strong results going forward". The bank is Overweight LNKD shares.
Online Video Gaming
Credit Suisse's Stephen Ju initiated coverage of the online video game industry this week. He's kicking his research off with a neutral bias "as games represent a smaller addressable market that is globally more penetrated versus other verticals, such as online advertising or e-commerce". While the analyst is lukewarm on the industry, his ratings of individual firm vary widely as he believes it's all about "content, execution, and strategy". According to Ju, investor sentiment for online gaming would only improve when the sector demonstrates prolonged growth in digital as an offset.
He launched his coverage of Activision Blizzard (ATVI) with an Outperform and $16 PT. Ju believes the company is on the cusp of global expansion for its best-performing asset and has best-of-breed management, execution, and development talent. He's less bullish on Electronic Arts (EA) and Take-Two Interactive (TTWO), which he initiated with Neutral ratings. Specifically with EA, he feels it's back to square one after its disappointments amidst an ongoing transition to digital. He's got a price target of $16 for EA. Lastly, he's at Sell and a $3 PT on Zynga (ZNGA) because he feels the company is playing cat-and-mouse, stuck on the content treadmill of trying to serve ever-less-sticky users.
Continuing the initiation theme, Needham's Laura Martin started coverage on TripAdvisor (TRIP) with a BUY rating. She posits that TRIP benefits from several secular shifts in Internet usage, including "including consumer demand for information everywhere, the wisdom of crowds transitioning to the wisdom of friends, the economic power of dominant brands, the power of intimacy at scale (i.e., personalization), and the growing importance of impartial reviews and recommendations".
Martin predicts EPS upside for TRIP in 2013 and beyond as the global economy improves, the company goes up against easy comps, and revenue grows internationally. She expects $1.90 of EPS in 2013, above consensus views. The media analyst put a target price of $38 using a 10-year DCF model.
Time Warner Cable
Martin also found time to publish EPS and price target change in a research piece on Time Warner Cable (TWC). Based on new 2013 estimates, she raised her 12-month PT to $115 (from $95) and around 17% above current trading levels. These rising estimates are the result of stronger operating margins, more efficient cost measures and lower expenses in 3Q12. Her BUY rating is based off of 3Q revenue estimate of $5.379B.
J.P. Morgan analyst, Doug Anmuth rang the bullish bell on eBay (EBAY) heading into its earning's report next week. He expects strong 3Q results on the revenue line while EPS is likely to come in at or above the top-end of guidance. Specifically, the researcher believes recent tweaks like improved search and seller incentives should continue to drive recent momentum in Marketplace.
In terms of PayPal, he thinks the Payments business should deliver strong TPV and revenue growth, the result of "overall strength in eCommerce". Anmuth told investors to expect upside to his team's $3.4B/$0.55 3Q revenue/EPS numbers for EBAY. He's overweight the stock.
CafePress (PRSS) was down almost 17% on Thursday after the firm negatively pre-announced its 3Q earnings. The firm had conducted a lot of promotional activity during the quarter and had increased its investment in facilities expansion. The firm also announced it would be acquiring EZ Prints, a personal products provider, for $30M in cash.
This led J.P. Morgan analyst Bo Nam to write, "Importantly, we believe CafePress' core business remains under pressure, and while the acquisition of EZ Prints could help the Shops business and expand growth opportunities, we believe heavy promotional activity will likely be required to drive the top line for at least the next few quarters." He lowered his revenue and EBITDA estimates and took down his PT to $11 on the news.
Shutterfly (SFLY) shares are down 14% over the past 3 weeks with little news or data issued from the company. Barclays analyst, Mark May attempted to explain the conundrum by pointing to 4 probably things at work here: 1) CafePress' (PRSS) negative pre-announcement, 2) chatter that American Greetings might move into the photobooks space, 3) PRSS's recent acquisition of EZPrints, and 4) recent selling by a top shareholder. In spite of all this, the analyst sees this recent activity as a buying opportunity and reiterated his Overweight rating. His price target is $42, 50% above where shares of SFLY are currently trading.
In a note sent to investors, Janney's Tony Wible deconstructed Liberty Media Corporation's (LMCA) Analyst Day. The analyst sounded a bit disappointed, as he felt most of what was discussed was already known. More importantly, investors didn't get better color on LMCA's plans regarding the Starz spinoff or its plans to acquire SiriusXM (SIRI). Wible didn't update his estimates but did raise his fair value on LMCA to $119 (from $110) to reflect an increase in value in the company's SIRI stake. He's Neutral on the stock.
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