Is this Plant Closure Causing Today's Weakness in Coinstar (CSTR)?

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Shares of Coinstar (NASDAQ: CSTR) are weaker Wednesday, which could be attributed to news that Flextronics Americas LLC announced plans to shut down its Creedmor, North Carolina plant, the primary manufacturing facility of Redbox kiosks since 2004.

Commenting on the news, analysts at Compass Point attribute the facility closing to a severe cut in Redbox's unit growth plans by Cointar's management. Moreover, the firm said they understand that Coinstar's management was aware of the anticipated plant closing and has been working closely with Flextronics management in order to smoothly transition to a new facility.

"While we do not view this particular event as a change in Redbox's unit growth strategy, we do reiterate that when Coinstar's management decides to slow Redbox unit growth the potential positive implications to free cash flow are meaningful."

The firm reiterated its Buy rating and $60 price target on Coinstar.

For an analyst ratings summary and ratings history on Coinstar click here. For more ratings news on Coinstar click here.

Shares of Coinstar last traded at $51.44, down 2%.

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