Guggenheim Lowers PT on Disney (DIS) to $120 Post-Q3 Report; Plenty of Positives Amid Cautious Outlook

Guggenheim trims its price target on Buy-rated Disney (NYSE: DIS) from $127 down to $120 following Q3 results on Tuesday night.

Analyst Michael Morris commented, Management surprised investors with a cautious outlook for fiscal 2016, citing an estimated $500mm FX-driven profit headwind and slowing profit growth at Cable Networks. The 2013--16 operating income growth outlook at cable was revised down to mid-single-digits from high-single-digits. Our updated FY16 EPS estimate is $5.50, versus our prior $5.80.

Despite the downward revisions and cautious tone, there were several positive data points, not the least of which was ahead-of-consensus 13 percent earnings growth. Core domestic affiliate fees grew double digits and F4Q trends include ad growth at Cable Networks (despite tough World Cup and NASCAR comparisons) and accelerating Parks and Resorts demand. Our results comparison and updated model are within, Morris noted.

Positive items for FQ415 include the start of the Star Wars product cycle and Cable and Parks trends.

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