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Nomura Securities Remains Bullish on Disney (DIS) Following Announced Departure of COO

April 5, 2016 9:45 AM EDT
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Price: $122.36 +1.14%

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    30 Buy, 19 Hold, 3 Sell

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Nomura Securities reiterated a Buy rating and $110.00 price target on Walt Disney (NYSE: DIS) following the company's announcement that Tom Staggs, the company's Chief Operating Officer, will step down from his current position as COO, effective May 6, 2016. Nomura believes that Staggs' departure will mean very little towards Disney's near-term. While some may point to his departure as a headwind/distraction to the Shanghai park opening, we note that the completion of the Shanghai Disney Resort is nearly complete at this point. Nomura also believe Mr. Staggs' departure potentially increases the likelihood that Mr. Iger extends his tenure as CEO.

Analyst Anthony DiClemente commented, "Last night, Disney announced that Tom Staggs, the company's Chief
Operating Officer (and previous heir apparent to the CEO), will step down from his current position as COO, effective May 6, 2016. This is certainly surprising and unexpected, particularly given the care that Disney and its Board had previously taken towards the succession process, seemingly to avoid precisely this sort of disruption. The struggle investors are likely to have is in the “why”; it is as of yet unclear as to what skill or area of expertise Mr. Staggs was lacking. The investment community and the press are likely to speculate: maybe the Board feels that an external candidate could bring greater diversity of background to the office, maybe the Board thinks Mr. Iger should stay on longer as CEO, maybe Mr. Staggs has other more expeditious offers, or maybe Tom just decided, for one reason or another, that he really didn’t want the CEO job after all; investors haven’t heard a clear answer to the “why” from Disney. We do know that while this news is clearly a setback to the company's efforts to find an adequate successor to Bob Iger (if this is even possible), that Mr. Iger does not plan to step down from his role as CEO until at least June 2018, leaving 2 ¼ years for the Disney Board to select an internal or external candidate, ample time to be sure."

For an analyst ratings summary and ratings history on Walt Disney click here. For more ratings news on Walt Disney click here.

Shares of Walt Disney closed at $98.68 yesterday.



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