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Wall Street Has Absolutely No Idea What To Make Of Disney

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Wall Street Has Absolutely No Idea What To Make Of Disney
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Walt Disney Co (NYSE: DIS)'s shares had a roller coaster ride in 2016, which ended with a loss of 0.82 percent. Fundamental performance was also lackluster, with the company reporting below-consensus results in the fiscal second and fourth quarters of 2016, while it trumped estimates in the first and third quarters of 2016.

Lackadaisical 2016

This is despite the company's studio division performing superlatively. The division took the distinction of the first studio to rake in ticket sales of $7 billion globally in a year. Four of the company's films took more than $1 billion in global box office in the year.

In the fourth quarter, the Studio Entertainment segment accounted for about 14 percent of its revenues and 12 percent of its segment operating profit.

More importantly, the success of this business also dictates the success of its consumer products segment, which accounted for roughly 8 percent of its revenues and 13 percent of its segment operating profit. The media networks and the parks and resorts segments contribute 43 percent and 33 percent to the top line.

Having seen off a lackluster year, what lies in store for the company in the new year? Analysts are equivocal regarding the prospects of the company. Here are a few sell-side opinions on the company.

BMO Capital Sees Overenthusiastic Reaction To 2018 Film Slate

BMO Capital Markets downgraded shares of Disney to Underperform from Market Perform and reduced its price target to $88 from $99. The rationale? Analyst Daniel Salmon broached the possibility of declines at its Disney Studio segment in 2017, given the tougher compares with 2016.

The firm noted that the shares have trended higher recently on the management's commentary on easing headwinds for ESPN traditional subscriber trends, a robust 2018 film slate and the launch of strong skinny bundle products.

Goldman Upgrades Disney On 4 Key Catalysts

Goldman Sachs analyst Drew Borst upgraded Disney shares to Buy from Neutral and raised the price target to $134 from $109. The actions were premised on four key catalysts, including Goldman's belief that the company's 2018 film slate might be its best ever, abatement of ESPN headwinds, scheduled opening of new part attractions between calendar year 2017 and 2019 and benefits from the potential corporate tax reforms.

Concerns Prompt Pivotal Slash Ratings On Disney

Pivotal Research Group lowered its rating on Disney to Sell from Hold, with price target lowered to $86 from $102. The firm's analyst Brian Wieser attributed the actions to concerns about the ongoing erosion of ESPN's subscriber base and mixed reports on Shanghai Disneyland from Asian press.

RBC Feels Fears On Disney Are Somewhat Assuaged, Raises Rating

While noting that Disney's stock is locked in a range despite a monster year at its studio and parks, RBC Capital Markets said investors are concerned about its distribution future and the performance at its ESPN unit. The firm, however, feels the fears are now somewhat assuaged and it raised its rating to Outperform from Sector Perform, with the price target lifted to $130 from $101.

Evercore Considering Naming Disney Its Top Pick For 2017

Vijay Jayant of Evercore ISI upgraded shares of Disney from Hold to Buy, with a price target of $120, up from a previous $103. In addition to an upgrade, Jayant stated in his note that he is now considering naming Disney a top pick for 2017, largely due to a macro call. The analyst argued that Disney is well positioned to benefit from many tailwinds, including, pro-inflation business model, mostly domestic model, the company being a full taxpayer, low leverage and high capital expenditure levels.

Latest Ratings for DIS

DateFirmActionFromTo
Jan 2018RosenblattUpgradesNeutralBuy
Jan 2018MacquarieUpgradesNeutralOutperform
Nov 2017B. RileyMaintainsNeutral

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