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Thomas Weisel upgraded Blockbuster (BBI
) to outperform from peer perform.
Analyst Kelly Chase says she upgraded the stock, and raised her $1.48 2003 earnings per share estimate to $1.54, which is well above the guidance of at least 35% earnings per share growth and the $1.44 consensus. Chase also raised the $1.69 2004 earnings per share estimate to $1.73. She says a big driver of her above-consensus earnings per share estimates is gross margin upside, resulting from Blockbuster's change in how it purchases rental inventory.
On Friday The Wall Street Journal reported that Blockbuster is mulling a possible merger with Columbia House in the face of a video-rental slump. Chase says she's encouraged by the new business initiative, which she thinks could result in revenue and earnings upside in 2004. She thinks a meaningful upside could remain in 2003 and 2004 earnings per share estimates, and that ongoing business initiative could further differentiate Blockbuster from its video-rental peers.
All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure
Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.
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