Walt Disney (DIS) Partnership w/ Netlix (NFLX) Puts DVD Sales in Jeopardy

February 6, 2013 11:16 AM EST
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Price: $107.97 -0.08%

Rating Summary:
    21 Buy, 18 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 11
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Walt Disney (NYSE: DIS) stock opened higher on Wednesday following the release of the company's better than expected Q1 earnings report. Despite positive results, analysts at Janney Capital were unimpressed and think the stock will enter a consolidation phase.

"We believe the recent deceleration in advertising combined with the reinvestment of Park profits will depress near term earnings growth and DIS’s premium valuation. As a result, we expect the stock to be range bound until the ad market recovers or DIS gets closer to recapturing returns on recent investments in 2014," said analyst Tony Wible.

Longer term, Wible has a more positive view of Walt Disney and thinks its sports programming helps isolate it from IPTV cannibalization risk. Its DVD business, however, is in a much tougher spot.

"Unit sales of DVD were down 23% YoY, which is in part due to difficult comparables," said Wible. "However, we also believe this is partly reflective of secular trends in the industry, which helped drive DIS to do the deal with Netlix (Nasdaq: NFLX)."

This, ironically, might further pressure disc sales longer term, said the analyst.

Janney Capital has a Neutral rating on Walt Disney with a modified fair value estimate of $58.00 (from $55.00).

For an analyst ratings summary and ratings history on Walt Disney (NYSE: DIS) click here. For more ratings news on Walt Disney click here.

Shares of Walt Disney closed at $54.29 yesterday.

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