Will Oscar Nods Boost Movie Stocks?

S&P sizes up the impact this year's nominations could have on big studios. Plus: Opinions on Bank of America and Thomas Weisel

From Standard & Poor's Equity Research

News Corp. (NWS; 4 STARS, buy)

Viacom (VIA.B; 3 STARS, hold)

Walt Disney (DIS; 5 STARS, strong buy)

Time Warner (TWX; 3 STARS, hold)

Analyst: Tuna Amobi, CPA, CFA

S&P sees more focus on specialty films as the the nominations for the 79th Academy awards are announced. We think this year's nominees validate major studios' offerings of specialty films with lower budgets. Among the dominant films in key categories such as Best Picture and Actor/Actress/Director are Fox Searchlight's (a News Corp. unit) Little Miss Sunshine and Notes on a Scandal, Viacom's Paramount Vantage unit's Babel, Disney's Miramax unit's The Queen and Venus. Time Warner is represented by Little Children, from its New Line studio, and The Departed a big-budget contender from its Warner Bros. unit. We note that there is a historically statistically insignificant correlation between Oscars and film profits, but the Academy's spotlight could fuel gains in "back-end" revenues (i.e., DVD sales, pay TV revenues, etc.).

Bank of America BAC

Maintains 5 STARS (strong buy)

Analyst: Frank Braden

BofA posts fourth quarter operating EPS of $1.19, vs. 89 cents one year earlier, 2 cents above our forecast. Investment banking revenue was higher than we expected, which was driven by strong debt underwriting fees. Net interest margin rose 2 basis points and net interest income saw modest growth of 1% over the third quarter, as solid loan growth was partially offset by lower core deposits as customers shifted to higher yielding products. Credit quality remained solid, and we are encouraged by a strong investment banking pipeline. We are maintaining our 12-month target price of $63, 12.9 times our $4.90 2007 EPS estimate, in line with peers.

Thomas Weisel Partners (TWPG)

Initiates coverage with 4 STARS (buy)

Analyst: Matthew Albrecht

We believe this investment bank should benefit in the year ahead from capital markets activity within its focus areas, including the technology, health care, and consumer groups, particularly related to capital raising. We expect that initiatives to build its asset management and brokerage businesses will help revenue growth in 2007. We see fourth quarter 2006 operating EPS of 24 cents, full-year 2006 at 82 cents, and 2007 at $1.07. We are setting our 12-month target price at $22, based on 20.6 times our 2007 EPS estimate, a premium to the company's larger peers but in line with its closest competitors.