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JP Morgan Analyst Bearish on Coinstar

A prominent analyst has spoken out against the earnings estimate for 2011 from Redbox parent Coinstar, sending the latter’s shares tumbling. JP Morgan analyst Paul Coster dropped his rating on Coinstar shares from “neutral” to “underperform”.

According to Coster, Redbox will continue to struggle with inventory issues and difficulties related to the 28-day delays it deals with from several studios. These factors will contribute to Coinstar shares underperforming this year, says Coster:

“We believe [Coinstar] is facing the near-term headwind of a weak slate of movies for rental compounded by the relative staleness rendered by the 28-day window,”

What do you make of Coster’s comments, Insiders? Did Coinstar deserve to have its rating dropped, or is this analyst being unnecessarily pessimistic?

(via Home Media Magazine)

12 Responses to “JP Morgan Analyst Bearish on Coinstar”

  1. Visitor [Join Now]
    Firstlawofnature [visitor]

    He’s not prominent. I don’t think he knows much about the company.

    • Visitor [Join Now]
      John Small [visitor]

      He knows enough about the industry to make intelligent comments which will be proven to be true in the next quarter.

      • Visitor [Join Now]
        Chris [visitor]

        Look, the only reason Redbox has shown a profit in previous quarters was because they were selling parts of their other businesses they use to own in order to make investors think they were making tons of cash off coin kiosk and DVD rentals. In fact they were only making cash off the sale of the other dying businesses they got rid of.
        It was a good plan until they started lying about steaming, Blu-Ray disc and games.
        The fourth quarter of 2010 was the first quarter in over a year and a half they did not sell parts of the business.They now have nothing else to sell.

        Now they are trying to buy back 50 million dollars of their own stock to make the remaining stock offering look good.

        Play school is over for Coinstar/Redbox since they have no other business to sell. That is why they have over 15 major law firms suing them now for lying to investors. Investors lost millions last month.
        Just google Coinstar lawsuits and you will see I am not making this up.

        Sad to say, but this could get ugly for company officials. You can’t tell people you are going in to streaming for over a year and half and never do it. You cannot pretend to have a large inventory of games in your kiosk to fool investors. You cannot put Blu-Ray’s in 50% of your kiosk then pretend you have them every kiosk nationwide.

        The truth is the truth and the Redbox customer service personnel who post to this site as customers does not have a need to get upset with me. Redbox had a company meeting and all employees were told of this news.

        15 Class action lawsuites in 3 weeks is not good. That is a lot of investors who think Coinstar/Redbox have mislead them.

        http://www.google.ca/search?sourceid=navclient&aq=0&oq=coinstar+law&ie=UTF-8&rlz=1T4SKPT_enCA402US402&q=coinstar+lawsuit

        • Visitor [Join Now]
          Firstlawofnature [visitor]

          Among the more foolish posts I have seen. Companies can’t sell a business at a huge loss and turn the proceeds into a gaap profit. Not possible.

          Do you work for one of these bucket law firms that sue without giving a crap about shareholders so they can collect $25,000 on a settle?

  2. Visitor [Join Now]
    modsq [visitor]

    These people still spewing about 28 day delays need to get over themselves. NOBODY cares. The $ wins. Droves of people aren’t going to change their ways because of it. Theater goers will go, renters will rent.
    The only valid point made was, “a weak slate of movies”. Though I’d bet more people would rather be out a $1 then $10+ for a movie their on the fence about.

  3. Visitor [Join Now]
    Consumer [visitor]

    Paul has a point. With the delay on the streaming format and the inventory problems with the 28 day delay look for Coinstar shares to underperform this year.

    Yet this has nothing to do with us consumers. $1 is still $1. People will still continue to use Redbox.

    • Visitor [Join Now]
      Firstlawofnature [visitor]

      Your points extrapolate December and January for the whole year and ignore valuation which is paramount to how the shares will perform this year. The shares have already dropped to reflect what happened recently. Cheery consensus always costs more.

  4. Visitor [Join Now]
    Vernon Dent [visitor]

    Did Coinstar deserve to have its rating dropped, or is this analyst being unnecessarily pessimistic?

    Coster’s comments regarding the dependency on content quality, mirrors many of my previous posts.

  5. Visitor [Join Now]
    John [visitor]

    Maybe he’s just mad because he didnt get any free redbox codes.

  6. Visitor [Join Now]
    Darrell [visitor]

    I don’t go to the cinema when movies first come out, it costs too damned much. I wait and go to a local theater that plays older movies for $3 and you can order food and drink wine or beer with your dinner. The theater is smaller, has bigger seats and usually a better behaved crowd.

    Same goes with the 28 day window. There is NO movie so important that I need to see it in the first 28 days. Sorry Hollywood, you’re smoking crack up your crack.