Coinstar Top PIck At Piper Jaffray (CSTR)

Piper Jaffray has an Overweight rating and a $74 price target on shares of Coinstar, Inc. CSTR. In a note sent to investors, Piper Jaffray writes, "The Redbox DVD kiosk business will account for ~85% of CY11 revenue. Approximately 30% of industry movie rental revenue was from retail stores in 2010, but we expect this will fall quickly over the next few years, with the kiosk, internet delivery and DVD-by-mail business models being primary beneficiaries. Given Coinstar's ability to secure content distribution deals with all major studios and the lower cost of content through 28 day delay deals, we believe margins have the potential to trend higher. While there is concern regarding internet delivery negatively impacting the Redbox business model, we believe any near-term (next 12 months) impact will be minimal. Additionally, while we do not expect a material revenue contribution in CY11, Redbox will be launching an internet movie offering sometime during the year. We are modeling for Coinstar revenue and EPS growth of 28% and 54% in CY11." Shares of CSTR lost $1.60 yesterday to close at $56.33, a loss of 2.76%.