CLSA highlighted three themes it saw in the recent quarterly report of Walt Disney Co DIS on whose shares the brokerage maintained an Outperform rating.
First, the company announced acquisition of a 33 percent stake in BAMTech and plans for an OTT ESPN offering. Second, an agreement for DIS networks to be carried by DirecTV Now, an OTT service. Third, the noisy results with unusual drivers contributing to a miss.
CLSA noted that DirecTV's announcement is positive as it addresses fears/concerns that ESPN won't be included in over-the top (OTT) offerings.
But, the planed ESPN OTT service could be a negative "if consumers' take-rate is below the Street's (potentially arbitrary) expectations and subscriber trajectory remains challenged, the bear case on ESPN will be reinforced and the stock pressured, as illustrated by the past 12 months."
In addition, analyst Vasily Karasyov projects more downside risk to the Consumer Products unit, which reported lower than expected operating income.
At time of writing, shares of Disney were up 0.18 percent to $96.84. The analyst has a price target of $115, implying a potential upside of 19 percent.
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