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The Zacks Analyst Blog Highlights: United Parcel Service, Amazon.com, Netflix, Apple and IAC/InterActive

Zacks Equity Research

For Immediate Release

Chicago, IL – June 4, 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 United Parcel Service, Inc. (UPS), Amazon.com Inc. (AMZN), Netflix Inc (NFLX), Apple Inc. (AAPL) and IAC/InterActiveCorp (IACI).

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Here are highlights from Monday’s Analyst Blog:

UPS Hikes Shipment Rates


Leading package delivery company, United Parcel Service, Inc. (UPS) has increased its freight rates by 5.9% on non-contractual shipments in the U.S., Canada and Mexico. The increase is effective Jun 10 and will be levied on less-than-truckload (LTL) and truckload (:TL) rates, and other ancillary charges.

UPS increases its freight and general rates from time-to-time. For 2013, the company raised its rates by 4.5% in UPS Air and International Services products of the domestic package business. Ground Services rates were increased by 4.9%. Express rates and Airfreight (including Next Day Air, 2nd Day Air and 3 Day Freight between U.S. Canada and Puerto Rico) rates were increased by 4.9%.

The rate hikes remain a key driver of the company’s yield expansion in the current market scenario of low demand trends, which would eventually propel profitability. This remains evident by the company’s expected growth in its yearly profits, which are expected to grow in the mid single-digit range, resulting in operating margins of 14% in 2013.

Apart from the routine rate hikes, UPS has a series of initiatives underway that is expected to deliver industry leading margin and earnings growth over the long term. Key among these is a renewed focus on yield improvement in the U.S. Domestic Package division. Other drivers include increased export volumes, operating leverage benefits sand capacity expansion plans. Further, the company continues to expand its footprint in emerging markets such as health care, which could be a larger contributor to growth in the future. The business wins are expected to expand the distribution reach further to Asian and Latin American markets as well as emerging countries like China and Brazil.

Amazon OKs 5 Pilots for Full Run

Amazon.com Inc. (AMZN) recently announced its decision to produce five original TV series. The final five were chosen from a group of 14 pilots that were earlier produced by its film production division, Amazon Studios.

These include 2 comedy series, Alpha House, a political comedy about four senators who live together in a rented house in Washington DC and Betas, a comedy about start-up culture in Silicon Valley. There are 3 children shows namely Annebots, a show about robots; Creative Galaxy, an animated art adventure series and Tumbleaf, a show about a small blue fox named Fig.

Management stated that these new series will be available on the Amazon Instant Video streaming service, where viewers can watch them free of cost.

Amazon Instant Video is a digital video streaming and download service that lets users rent, buy or subscribe to a range of video content. These new television series will extend the archive of comedy and children shows on Amazon's video streaming library, making it a significant force in the video streaming segment and increasing competition for Netflix Inc (NFLX) and Apple Inc. (AAPL).

Many technology companies, including Hulu and Netflix, are getting into content production in order to reduce their reliance on traditional media companies. Amazon is also one of several big streaming services working on original content and has now finally decided to release its shows by the end of this year and in early 2014. We believe these efforts will bring in millions of dollars and help the company to increase its market share.

Besides developing its own original series, Amazon has also been beefing up its Prime Instant Video service through major licensing agreements. The company recently inked exclusive streaming rights to the PBS hit drama, Downton Abbey, FX's Justified and the upcoming CBS show Under the Dome.

Amazon is one of the leading players in an extremely fast-growing market. In the first quarter, Amazon’s earnings were well ahead of the Zacks Consensus Estimate of 10 cents. But revenues of $16.07 billion were down sequentially as well as from the year-ago quarter.

Amazon currently retains a Zacks Rank #3 (Hold). Another technology stock IAC/InterActiveCorp (IACI), has a Zacks Rank #1 (Strong Buy) and is worth considering.


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