Analysts Don’t Know What to Make of Disney’s Latest Quarter

Image of Mickey Mouse rollercoaster at DisneyLandYesterday, Walt Disney Co (NYSE:DIS) posted earnings after the bell. As analyst notes following the report trickle in this morning, we’re seeing Wall Street sentiment ranging all over the map for the entertainment giant.

Here’s a breakdown of the various analyst notes we’ve seen thus far:

  • Macquarie Group upgraded DIS from Neutral to Outperform. The firm had previously downgraded the stock to Neutral back in January.
  • RBC Capital Markets noted that Disney’s overall results were “incrementally positive but structurally neutral.” The firm left its Sector Perform rating unchanged, as well as its $103 price target (~6% upside). The analyst noted that Disney trades at a P/E discount to the S&P500, probably due to cord-cutting concerns that have largely left media companies out of the wider market rally.
  • Pivotal Research Group cut their price target for DIS from $122 to $118 (still a 20% upside). The firm cited soft growth in cable affiliate revenues for the slightly less bullish view. Still, they see long-term value here and feel the stock is undervalued at current levels.
  • FBR Capital Markets lauded Disney’s better margins at theme parks, as well as its stake in a streaming media company, but still sees sentiment overhang and tough comps moving forward. The firm had downgraded DIS late last month, and remains neutral.
  • Needham & Co said that profits were driven primarily by the film segment, which helped offset weakness in TV and Consumer Products. The firm liked its streaming media investment, ESPN’s inclusion in DirecTV’s skinny bundle, but worry about film and theme park strength moving forward. Accordingly, the analyst left its Hold rating unchanged.

We expect more analyst commentary to flow in over the next few days, as DIS is a widely-held and widely-covered stock that is the undisputed leader in the entertainment industry. The company had seen incredible business and share price growth from mid-2011 through mid-2015, but peaked around $120 per share and has underperformed in the year since its run ended.

Disney shares rose $1.67 (+1.73%) to $98.34 in Wednesday morning trading. DIS has fallen 6.55% year-to-date, versus a 7% gain in the benchmark S&P 500 during the same period.

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