In a note on Thursday, Morgan Stanley Research analyst Benjamin Swinburne lowered Walt Disney CoDIS
estimates and PT to $70 and initiated an equal-weight rating versus their previous over-weight rating. Swinburne noted ESPN's complete renewal distribution leading to limited affiliate growth and advertising risk. Further, the purchase of Lucasfilm “should be a long-term positive in FY 15/16, but strong performance is needed to justify the ~$4B cost. Also, limited growth in the Film/ CP business post- Marvel makes us cautious on the upside at Lucasfilm.” The analyst further added that future films, such as Star Wars may not have the “ability to deliver earnings and returns beyond what is already discounted in shares.” Swinburne remains bullish on new attractions and cruise ships. Morgan Stanley reminded investors of new positive initiatives such as MyMagic+ and Disney's attractive industry view. Unfortunately, other risks, including two DISH renewal lawsuits as the 8-year carriage agreement expires, are impending. DIS closed at $67.11 yesterday.
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