Disney Scores High with Analysts Following 1Q Results

The Walt Disney Company DIS reported first quarter results on Wednesday, February 5. First Quarter Highlights:

Walt Disney reported first quarter EPS of $1.03 versus the estimated $0.92.
Earnings per share were up 30% quarter-on-quarter.
Revenue came in at $12.30 billion versus the estimated $12.24 billion.
Sales were up 8% year-over-year.
Management commented that profit soared 33% driven by across-the-board strength.

Analyst Comments:

UBS analyst John Janedis reiterated a Buy rating on Walt Disney. UBS expects Disney to trend higher in 2014 and sees Frozen's box office success to contribute to earnings for quarters across multiple business segments. Janedis commented, "We expect y/y margin improvement to moderate going forward as ESPN absorbs higher programming costs (MLB, NFL, World Cup), particularly in F2H. We are lowering our F2Q cable ad growth estimate to +2% (vs. prior +6%), with ad revs currently pacing up slightly likely somewhat impacted by the Olympics. We are giving some of the upside in F1Q back in the rest of the year to better account for higher expenses."
Doug Mitchelson from Deutsche Bank reported "Disney is our top pick in media as we see both estimate and valuation upside potential over time. Disney invested in new IP (Planes, Disney Infinity, etc.), key acquisitions (Marvel, LucasFilm) and Parks capex before, during and post- recession, in addition to a step-up in shr buybacks to $7b/yr, providing the greatest visibility for growth we have seen in our coverage history; we see 15%-18% EPS growth per annum the next 3 years." The analyst maintained a Buy rating on the company.
Analyst Vijay Jayant from ISI group reiterated a Neutral rating and $77.00 price target on Disney following earning results. Jayant noted that all of the company's divisions outperformed expectations, most notably the Studios. The analyst emphasized that consumers are still demanding Disney products and experiences and commented on the "lingering success" of Frozen.
Wunderlich Securities analyst Mathew Harrigan focused on some key points contributing to " the best businesses among the integrated media houses." Harrigan noted that Frozen is the all-time top grossing Disney animated film globally, ESPN shows near 10% advertising momentum with positive pacing, new domestic attractions at the parks showed continued business momentum. The analyst further focused on the company's "optimal position" for digital media developments (including TV Everywhere and 4K UltraHD) and the studio's place as a "lynchpin for dependable performance as it is less exposed economically than the parks or ESPN, even as its creative engine creates more possibilities for other businesses such as global park attractions and Consumer Product and Interactive adoptions." Wunderlich maintained a Hold rating and $77.00 price target due to unsettled global macro and economic sensitivities.

Shares of Disney closed at $75.56 on Thursday.

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