Retail, Media & Entertainment Sector Update (BBY, HGG, DIS, DWA, CNK)

Analysts David Strasser and Tony Wible at Janney Capital Markets have a released a report on the Retail, Media & Entertainment sector. The report takes a look at the stocks in the two sectors that stand to benefit from the 3D product cycle.

According to the report, 3D technology is seeing big investments from manufacturers, retailers, theater operators, and media companies. Analysts expect this investment in 3D technology to improve content, marketing and production/in-stock levels, which will further accelerate the adoption rate of the technology.

Analysts are bullish about the prospects for specialty CE retailers due to improved traffic, new 3D content and TVs at only a modest premium to existing LED technology. In the media sector, analysts believe that 3D technology has provided new growth opportunities for studios.

Analysts’ top picks in the retail sector include Best Buy Co., Inc. (NYSE: BBY), and hhgregg, Inc. (NYSE: HGG). The fair value estimate for Best Buy and hhgregg has been raised to $48 and $27, respectively.

Analysts’ top picks in the media sector include Cinemark Holdings, Inc. (NYSE: CNK), The Walt Disney Company (NYSE: DIS), DreamWorks Animation SKG, Inc. (NASDAQ: DWA), and Regal Entertainment Group (NYSE: RGC). All the companies are good 3D investments; however, analysts believe that DreamWorks Animation has the most exposure to 3D due to its commitment to produce all films in 3D. Regal Entertainment and Cinemark Holdings also have exposure to 3D but they will benefit from it only on the number of 3D screens they have. Analysts believe that Walt Disney will also benefit from 3D.