Near-Term Headwinds Prompt Imperial Capital To Lower Disney Price Target

Global media and entertainment giant Walt Disney Co DIS faces two near-term  headwinds, and the stock now has upside potential of less than 4%, according to Imperial Capital.

The Analyst

David Miller maintained an In-Line rating on Disney's stock with a price target lowered from $147 to $140.

The Thesis

College football fans typically get excited for the upcoming season in early August, but Disney investors are likely less excited for the start of the season.

The first two weeks of matches on Disney's ESPN network include "very little" in the way of match-ups involving elite teams, such as Georgia and Murray State, Miller said in a Tuesday note. (See his track record here.) 

The opening games ESPN broadcast last year included elite matchups, which was "very unusual" for early September, the analyst said. The "mothership network" faces a difficult comparison in terms of gross ratings points and advertising, he said. 

Disney is "easily" the most correlated stock within the media and entertainment space to consumer confidence, Miller said.

If the consumer index continues to decline, it could prompt many consumers to hold off on their "vacation of a lifetime," the analyst said. 

Imperial lowered its fiscal fourth quarter non-GAAP EPS estimate from $1.13 to 96 cents, which is "well below" the consensus estimate of $1.10.

The research firm also lowered its fourth-quarter revenue estimate of $19.53 billion to $19.35 billion.

Price Action

Disney shares were down 0.11% at $135.15 at the time of publication Tuesday. 

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