Analyst Boosts Disney, Comcast's Theme Park Estimates On Better Than Feared Expectations

  • KeyBanc analyst Brandon Nispel had an Overweight rating on Walt Disney Co DIS with a $119 price target.
  • Total DIS Theme Park attendance for December was -8% Y/Y and +20% M/M. 
  • The Y/Y decline in attendance was slightly better than in November, and the M/M change was above the 2017-2019 average, suggesting a solid finish to 2022. 
  • The analyst mostly saw softness at WDW. For Q4, the data shows -8% Y/Y versus -6% Y/Y in Q3, meaning attendance trends appear to be mainly stabilizing, coming off 86% Y/Y in Q1 and 24% in Q2.
  • Nispel expects DIS Domestic Park and Hotel revenue of $5.52 billion (+15% Y/Y, +10% Q/Q) below the consensus of $5.59 billion (+16% Y/Y, +12% Q/Q). 
  • The 15% Y/Y growth reflects a deceleration from Nispel's estimated 41% Domestic Park revenue in Q4.
  • Nispel had a Sector Weight rating on Comcast Corp CMCSA.
  • Total Universal Park attendance in December was -8% Y/Y and +47% M/M. 
  • The Y/Y decline missed the prior three-month average but was better than in November. The M/M change beat the 2017-2019 average suggesting a pickup in activity during the Holidays. 
  • Similar to DIS, Universal Orlando was -23% Y/Y, and tracking worse than California, where Universal Studios Hollywood was +27% Y/Y.
  • Nispel expects NBC Universal Theme park revenue of $2.01 billion (+6.7% Y/Y), below the consensus of $2.02 billion (+7.1% Y/Y).
  • Nispel raised his Theme Park estimates as the review of the analyst's attendance data, historical trends, and his assumptions prompted slightly higher estimates, though still below consensus. 
  • The analyst believes Theme Parks represent differentiated assets in Media that provide critical cash flow to fund the Linear to Streaming media transition. 
  • Nispel's domestic geolocation data tracking Disney and Universal theme park attendance continue to trend negatively though the deceleration in the analyst's attendance data has been more severe than reported results. Therefore, Nispel took Y/Y growth rates stable in Q4 as a moderating positive sign. 
  • Price Action: DIS shares traded lower by 0.61% at $99.30 and CMCSA shares traded lower by 1.78% at $38.24 on the last check Wednesday.
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