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Bank Of America's 6 Takeaways From Disney's Q3

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Bank Of America's 6 Takeaways From Disney's Q3
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Walt Disney Co (NYSE: DIS) reported fiscal third-quarter earnings Tuesday that fell short of the Street's expectations, but were ahead of what Bank of America Merill Lynch modeled. 

The Analyst

Bank of America's Jessica Reif maintained a Buy rating on Disney's stock with an unchanged $144 price target.

The Thesis

Disney's Q3 came in ahead of BofA's below-consensus forecast, as the company's theme parks, cable networks and broadcasting businesses were offset by softer performance in its consumer products and studio businesses, Reif said in a research report. (See her track record here.) 

The analyst had six takeaways from the quarterly print: 

  • Cable network operating income fell just 5 percent versus expectations of a 10-percent decline, as the business realized mid-single digit affiliate growth, including an improved 2-percent decline in subscribers.
  • Broadcasting operating income rose 43 percent against expectations of 16 percent, as the company saw strong licensing contributions from shows like "Designated Survivor" and "How To Get Away with Murder."
  • Disney saw lower equity income of $78 million versus expectations of $86 million on Hulu losses.
  • The theme parks business reported better-than-expected operating income despite a $47-million negative impact from the timing of Easter.
  • The shortfall in film operating income was due to soft home entertainment performance and other impairments.
  • Consumer products did fall short of expectations due to difficult comps and the underperformance of "Solo" products.

Price Action

Disney shares were down 0.63 percent at $115.82 at the time of publication Wednesday. 

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Latest Ratings for DIS

DateFirmActionFromTo
Aug 2018B. Riley FBRMaintainsNeutralNeutral
Aug 2018BMO CapitalMaintainsMarket PerformMarket Perform
Jul 2018Credit SuisseInitiates Coverage OnNeutral

View More Analyst Ratings for DIS
View the Latest Analyst Ratings

Posted-In: Bank of America Disney Theme ParksAnalyst Color Earnings News Price Target Reiteration Analyst Ratings Best of Benzinga

 

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