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

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

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

Sep 2019Initiates Coverage OnOutperform
Sep 2019MaintainsIn-Line
Aug 2019MaintainsIn-Line

View More Analyst Ratings for DIS
View the Latest Analyst Ratings

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