Bibbidi Bobbidi Blah: Disney's Q4 Just As Tough As Expected

Bibbidi Bobbidi Blah

But, Bank of America reiterated its Buy rating on the stock on potential success of Shanghai Disney Resort, parks, solid pipeline of LucasFilm/Pixar/Marvel/Disney theatrical/CP fare and stable-to-low-growth media networks.

“We anticipate a solid film slate in FY 2017E (incl. Rogue One, Beauty and the Beast, Guardians of the Galaxy 2, Pirates of the Caribbean 5 and Cars 3) and FY18E (Star Wars VIII, Avengers: Infinity War and Untitled Han Solo),” analyst Jessica Reif Cohen wrote in a note.

On the valuation front, Cohen noted that Disney shares are cheap as it is trading at a 13 percent calendar year 2017 P/E discount to the market.

Meanwhile, Disney’s quarterly earnings of $1.10 per share on revenue of $13.14 billion missed consensus view of $1.16 per share and $13.52 billion.

A Look Ahead

Looking ahead to the first quarter, the analyst said ABC scatter is +24 percent versus the upfront and ESPN adv. is pacing down due to the timing of first quarter College Bowl games (three versus six last year).

As expected, the analyst said FY17 will see a $600 million NBA step-up at ESPN. But, Disney removed an overhang by quantifying the impact of ESPN's new contract with the NBA.

However, Cohen cut FY 2017 EPS estimate to $6.06 from $6.37. The analyst has a price target of $125 on the stock.

That said, the analyst believes Disney shares will outperform peers, driven by parks & resorts, improving studio outlook, positive fundamentals at media networks and interactive, and surging free cash flow.

Despite mixed results, shares of Disney are in the green ,suggesting that investors is looking beyond the ESPN woes and is focusing on the diverse growth opportunities of the company.

At last check, shares of Disney were up 3.13 percent at $98.93.