The Zacks Analyst Blog Highlights: Viacom, Telecom Italia, Apple, Google and Portfolio Recovery Associates

Zacks


For Immediate Release

Chicago, IL – July 9, 2013 – 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 Viacom Inc. (VIAB-Free Report), Telecom Italia S.p.A. (TI-Free Report), Apple Inc. (AAPL-Free Report), Google Inc. (GOOG-Free Report) and Portfolio Recovery Associates Inc. (PRAA-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Viacom to Raise Stock in MTV Italia

Through a recently inked agreement, Viacom Inc. (VIAB-Free Report) will gain full control over Telecom Italia Media owned MTV Italia -- a division of Telecom Italia S.p.A. (TI-Free Report). The company will buy a 51% stake in the music channel for a total consideration of €10 million ($12.825 million).

The deal is expected to close by the end of Sep 2013, subject to regulatory approval. In addition, Viacom has not only renewed its multi-year broadcasting agreement with the media company but was also waived off from Telecom Italia Media’s €9.7 million ($12.44 million) loans to MTV Italia.

Despite telecasting original hits like Very Victoria, Italo-Francese, Avere Ventanni and Hitlist Italia along with the Italian version of Total Request Live, LoveLine and Brand New, MTV Italia’s revenues dropped 25% to $70.5 million in 2012 as compared to $94 million in 2011. The continuous fall in the advertisement business coupled with a highly volatile European economy have resulted in such a drop in MTV’s business.

A few days back, Telecom Italia Media also divested its loss making network, La7 TV. Hence, we believe that selling its stake to Viacom is part of its strategy to divest the unprofitable assets. This will not only bolster profitability but will also help the company manage its debt position.

Following the acquisition, Viacom will become a dominant force in the Italian media industry by having complete control over seven popular networks (MTV channels, Nickelodeon, Nick Jr. and Comedy Central) in the country.

Moreover, the company is strengthening its international core channels like MTV and Nickelodeon by investing heavily on original series and launching Nick app for Apple Inc.’s (AAPL-Free Report) iPhone users and Google Inc.’s (GOOG-Free Report) Android users. Such a move will drive ad revenue; consequently will also help the fans to get closely associated with the brand.

Currently, Viacom has a Zacks Rank #2 (Buy).

PRAA Upgraded to Strong Buy

Zacks Investment Research upgraded Portfolio Recovery Associates Inc. (PRAA-Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Portfolio Recovery reported positive earnings surprise in the last four quarters with an average beat of 8.28%. The long-term earnings growth of the company is presently pegged at 15%.

Portfolio Recovery’s bottom-line results have shown steady improvement over the past few quarters. Strong cash collections drove revenues upward, while an increase in operating income drove operating margin higher.

Moreover, to make the shares more affordable, Portfolio Recovery announced a 3:1 stock split in Jun 2013, which will be conducted on or around Aug 1, 2013. This is the first stock split being implemented by the company, which went public in 2002.

Further, Portfolio Recovery has expanded beyond its primary debt collection business into government collections, audit services and claims settlement with the acquisitions of IGS Nevada, Alatax, Broussard Partners, MuniServices, Claims Compensation Bureau and Mackenzie Hall. The ability to acquire and assimilate businesses in related fields is certainly a long-term positive as the traditional debt collection business matures and becomes more competitive.

We expect Portfolio Recovery to grow 20% year over year in the second quarter of 2013. Consequently, the Zacks Consensus Estimate is currently pegged at $2.24 per share. Over the last 60 days, 2 out of the 5 analysts covering the stock raised their estimates for Portfolio Recovery’s second quarter and full year 2013.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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