Trefis Top 5 – May 9 Insights (NFLX, DD, MSFT, DUK, LTD)
Last week Netflix (NASDAQ:NFLX) was reportedly discussing media rights deals with entertainment companies regarding distribution in Latin American prompting speculation that this is the next international destination for the streaming service. We initiated coverage on DuPont (NYSE: DD) recently and highlight its safety and materials segment which accounts for around 40% of our price estimate. Of the earnings flurry last week, we highlight key takeaways in the reports for Microsoft (NASDAQ:MSFT), Duke Energy (NYSE:DUK) and Limited Brands (NYSE:LTD).
Netflix May Go to Latin America Next, Our Take
According to a Bloomberg article, Netflix (NASDAQ:NFLX) might be looking to expand into Latin America after its Canadian expansion. [1] Below we present our quick take on this. Although Netflix’s business model is unique, it still competes with Apple’s (NASDAQ:AAPL) iTunes, Hulu, video on demand (VoD) services from pay-TV providers like Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC) and Google (NASDAQ:GOOG) which has announced plans to launch a paid streaming service via Youtube.
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Coverage Launch: $58.10 Trefis Price Estimate for DuPont
DuPont (NYSE: DD) supplies high-performance materials and chemicals, high-performance coatings and agricultural products to industries and consumers worldwide. DuPont’s products have a vast array of applications and are used by a wide range of industries which include farming (for agricultural products such as seeds and pesticides), construction, transportation, packaging, paper & pulp and consumer electronics. DuPont competes with companies such as Monsanto (NYSE: MON) in the agricultural products segment, and other global chemical companies such as Dow Chemicals (NYSE: DOW), 3M (NYSE: MMM) and BASF.
Microsoft Leaning on Business PC Market Growth
Microsoft (NASDAQ:MSFT) recently announced its fiscal year Q3 2011 earnings in which it noted that the business PC market grew by 9% compared to the same period last year. On the other hand, the consumer PC market declined by 8%, dragging the overall PC market down by 1-3%. [2] PC market growth is not only important to Microsoft, but also to PC manufacturers like Apple (NASDAQ:AAPL), HP (NYSE:HPQ) and Dell (NASDAQ:DELL).
In our earlier note titled PC Market Weakness is Bad News for Microsoft, we discussed how long-term weakness in the PC market could spur downside to our $29.62 price estimate for Microsoft stock. Our price estimate stands about 15% above market price.
Duke Reports Higher Industrial Energy Demand
Duke Energy (NYSE:DUK) reported first quarter FY11 earnings earlier last week, which showed strong industrial demand on the back of a recovering economy. Residential sales were down and U.S. Franchised Electric & Gas were relatively flat. Duke Energy is one of the largest electric utilities in the U.S. along with American Electric Power Company (NYSE:AEP), Exelon Energy Corp, Allegheny Energy (NYSE:AYE) and Progress Energy (NYSE:PGN).
Limited Investors Loving Victoria’s Secret
Limited Brands (NYSE:LTD) reported a 20% increase in comparable store sales of $683 million in the month of April over the same period last year. For the quarter ending in April, the increase in comparable sales was a healthy 15% as Limited Brands’ sales crossed $2.2 billion in sales. [3] Victoria’s Secret led the charge with a jump of 25% in sales for April year-over-year, and the power of this recognized lingerie, beauty and personal care lines help separate it from those like Abercrombie & Fitch (NYSE:ANF), American Eagle (NYSE:AEO), AnnTaylor (NYSE:ANN) and Gap (NYSE:GPS).
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