Analyst: Expect Good Things From Coinstar Q41 Feb, 2012 By: Chris Tribbey
A combination of picking up departing Netflix customers and a 20 cent jump in Redbox rental prices will give its parent company Coinstar better-than-expected fourth quarter and full-year 2011 results, according to one analyst.
Michael Pachter, research analyst with Wedbush Securities, wrote in a note to investors that the absence of Coinstar president and COO Gregg Kaplan — who will return to work in April — shouldn’t have any meaningful impact on the company’s financial results.
Coinstar’s stock was trading above $50 Feb. 1, and Pachter is valuing it at $72, with 2012 earnings per share of $4.20. That’s ahead of other analysts, who put earnings per share at around $3.
Pachter wrote he believes Coinstar’s revenue for the fourth quarter hit $510 million, ahead of analysts’ consensus of $498 million. He said the loss of an estimated 9 million DVD subscribers by Netflix — equaling more than 200 million DVD rentals a year — gives Redbox a slew of potential new customers.
“If Redbox captures 40% of these rentals at $2.50 per transaction — over two days at $1.20 per day — it should see incremental revenue growth of $200 million in 2012,” he wrote.
Pachter also wrote that the earlier availability of Warner Home Video DVDs should offset the added costs to obtain them. Redbox’s deal to acquire discs directly from Warner ended Jan. 31, but so too did a 28-day delay on titles from the studio. Warner is seeking a 56-day delay on new releases for Redbox, a delay Netflix has already agreed to. Redbox will instead be buying discs directly at retail to stock its kiosks.
Coinstar will announce its fourth quarter financial results Feb. 6.