Stifel Downgrades Disney, Sees Valuation

Stifel’s Benjamin E. Mogil believes that Walt Disney Co DIS shares are relatively fully valued at present.

Mogil downgraded the rating on the company from Buy to Hold, with a price target of $110.

Thoughts On Valuation

“From a valuation and growth perspective, we continue to see the company as somewhat of a split story,” the analyst mentioned.

Mogil believes that the Studio and the corresponding Consumer Products businesses continue to deserve a solid multiple to reflect the robust pipeline in the Studio segment.

The analyst stated that this pipeline “no longer justifies an asterisk or a one-off and instead is more reflective of a strong cycle from not just from Marvel and Pixar but increasingly from Disney Animation and Disney live action.”

Parks & Media

In addition, the Parks segment is expected to grow as the startup losses associated with Shanghai are reversed, along with the continuing strength in the performance of the domestic Park segment.

“On the other side of the ledger is the Media segment. While there has been some relief/reduced concern around the carriage and MVPD subscriber numbers at ESPN YTD, we estimate that F2017 will be a likely flat year to possibly at Cable OI,” Mogil stated.

The analyst also believes that the sports rights license environment continues to favor the right holder, despite MVPD subscriber concerns, with continued inflation expected in this arena.

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