Disney Is A 'Premier Content Play,' Credit Suisse Says

In a report published Wednesday, Credit Suisse analyst Omar Sheikh initiated coverage of

with an Outperform rating and a price target of $130. Walt Disney is well positioned to benefit from consumption shifts to digital platforms. The company's growth prospects are driven by its strong content assets, unique exploitation model and improving returns and earnings. "We are bullish on Disney because (1) the company's film studio assets create IP, which has substantial strategic value as opportunities to monetize content in the online video ecosystem multiply; (2) Disney's industry-leading parks and consumer products business enable the company to generate revenue streams from its movie output with enable significantly higher CFROI® than peers; and (3) ESPN has the strongest sports rights portfolio in the industry, with contracts locked in until 2021-25, and therefore, it retains significant pricing power with distributors," analyst Omar Sheikh mentioned. Walt Disney's future performance will be driven by the release of the Star Wars sequel in December 2015 and the opening of the Shanghai Disney, scheduled for 1H2016. Credit Suisse expects Walt Disney's 2015 revenues to grow by 8 percent and EPS by 17 percent, driven by the company's cable networks and consumer products. "Over the next three years, we forecast the company will grow its top line by 7% pa, driven by Cable Networks and Theme Parks," Sheikh added. In the report Credit Suisse noted, "Our forecasts include nothing for OTT exploitation of Marvel and LucasFilm properties, which we believe should provide incremental upside potential to our earnings forecasts."