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The Zacks Analyst Blog Highlights:Netflix, Moody's, Amazon, Verizon and Sony

CHICAGO, Feb. 6, 2014 /PRNewswire/ -- 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 the Netflix Inc. (Nasdaq:NFLX-Free Report), Moody's (NYSE:MCO-Free Report), Amazon (Nasdaq:AMZN-Free Report), Verizon (NYSE:VZ-Free Report) and Sony (NYSE:SNE-Free Report).

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Here are highlights from Wednesday's Analyst Blog:

Netflix to Issue $400M in Debt

Netflix Inc. (Nasdaq:NFLX-Free Report) recently announced that it will raise $400.0 million by issuing senior notes. The company expects to use the net proceeds to fund its international expansions as well as corporate expenditures. Last year, Netflix raised $500.0 million securities for similar purposes.

According to Bloomberg, Netflix issued 5.75% senior notes due 2024 that yield 313 basis points (bps) more than bonds with similar maturity dates. Most recently, Moody's (NYSE:MCO-Free Report) raised Netflix's credit rating outlook to positive (Ba3), citing strong operating performance and continuing subscriber growth.

We believe that the cash infusion will help Netflix pursue its global expansion policy. Although the company has ventured into Latin America and Europe (U.K., Ireland, Nordic countries and the Netherlands), it has immense growth opportunity in the uncharted areas of Western Europe.

We believe the strategy to expand internationally will be accretive for Netflix over the long term, as it significantly diversifies the risk of customer concentration in a particular region. At the end of 2013, Netflix had 10.93 international members and revenues jumped to $712.4 million from $287.5 million at the end of 2012.

However, the international streaming segment continued to report loss at the end of 2013. Although Netflix expects to add 1.60 million international subscribers and report revenues of $267.0 million, loss is projected to be $42.0 million in the first quarter of 2014.

We also believe that Netflix will use the net proceed to acquire original content in 2014. The company's expanding content portfolio that includes original productions such as House of Cards, Hemlock Grove, Orange is the New Black and Lilyhammer, drove the subscriber base in 2013.

Total streaming subscriber base increased 11.08 million year over year to 44.35 million at the end of 2013. Netflix in collaboration with The Weinstein Company (TWC) will stream the drama series Marco Polo in late 2014. The company will also stream original shows such as Sense 8 (early 2015) and Narcos over the next couple of years.

We believe that the expanding content portfolio and launch in the new international markets will help it to counteract stiff competition from the likes of Amazon (Nasdaq:AMZN-Free Report) Prime, HBO, Hulu, Youtube, iTunes Video and BBC iPlayer. Netflix will also face competition from Verizon (NYSE:VZ-Free Report) and Sony (NYSE:SNE-Free Report) that are gearing up to enter the streaming business.

Moreover, the increasing debt level remains a concern. Further, Netflix has $6.5 billion due for content streaming obligations, out of which $2.78 billion needs to be paid within the next 12 months. After that period, Netflix needs to pay $2.83 billion within a three-year time frame. Going forward, this huge impending payment obligation would remain an overhang on the stock.

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

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

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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