Disney Reiterated at Neutral - Analyst Blog
January 10 2013 - 6:20AM
Zacks
We have maintained our long-term
Neutral recommendation on The Walt Disney Company
(DIS) with a target price of $53.00. Moreover, shares of Disney
retain a Zacks Rank #3 (Hold).
Why the
Reiteration?
Disney remains well positioned to
drive revenue growth in the coming quarters through its strategic
initiatives as the company continues to invest in its core
businesses while expanding its operating margins.
Despite a difficult operating
environment, the company did not change its strategies and remained
focused on deploying its capital toward broadening its Parks and
Resorts business, and in turn creating long-term growth
opportunities.
Disney entered into several content
distribution agreements with Comcast Corp (CMCSA),
Netflix Inc. (NFLX), Cox Communications
and Charter Communications Inc. (CHTR), which
strengthen Disney’s multichannel subscription model by adding more
platforms to deliver its content.
Going ahead, the company remains
focused to generate increased income from affiliate deals and
retransmission renewals. However, Disney listed a number of
challenges that will negatively impact its financials in the
upcoming quarter.
The first quarter of fiscal 2013
will see an increase of $170 million in domestic sports right
costs, while home entertainment revenues are expected to remain low
due to the difficult year-over-year comparison as the first quarter
of fiscal 2012 included robust performance of Cars 2 and the Lion
King.
Further, macro headwinds, higher
tax rate (2% higher than the prior-year quarter) and effects of
Hurricane Sandy are short-term deterrents.
Other Stocks to
Consider
Other stocks in the media &
entertainment universe worth considering are Time Warner
Inc. (TWX), which holds a Zacks Rank #2 (Buy) and
News Corporation (NWSA), which holds a Zacks Rank
#3 (Hold).
CHARTER COMM-A (CHTR): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
TIME WARNER INC (TWX): Free Stock Analysis Report
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