Disney (DIS): The Revenue Dance - Needham

Needham & Company analyst, Laura Martin, shifted revenue across the different segments at Disney (NYSE: DIS) netting out to an increase of .3% that does not flow through to the bottom line. The rationale for the changes reflects:

1) Strong box office results from The Jungle Book and Finding Dory, and continued strong performance of Captain America: Civil War, (ie, Studio Entertainment up)

2) lower than expected ratings, higher programming costs, and higher investment levels in Hulu (ie, lower Media Networks)

3) $150mm of pre-opening costs for Shanghai Disneyland, as well as Easter occurring in 2Q16 this year, vs 3Q last year, (ie, lower Parks)

4) F/X headwinds and difficult comps in the Consumer Products/Interactive division

The net difference is revenue of $13.96B is up 7% y/y (0.3% above previous estimates), Segment OI of $4.35B is up 6% y/y (0.4% below previous estimates), and EPS of $1.60 is up 10% y/y (no change).

-Cable Networks. revenue of $4.264B (up 3% y/y, 3% below previous estimates), Lower than anticipated ratings and higher programming costs are the primary drivers of these revisions.

-Broadcasting. revenue of $1.579B (down 3% y/y, 3% below previous estimates), higher programming costs and a larger investment in Hulu than previously expected in FY3Q16.

-Parks & Resorts. revenue of $4.38B (up 6% y/y, 3% below previous estimates), Easter occurring in the 2Q16 quarter and approximately $150mm of costs related to the Shanghai park opening being recognized in this quarter.

-Studio Entertainment. revenue of $2.55B (up 25% y/y, 23% above previous estimates), better than expected box office results and a strong home video release slate, which included Star Wars: The Force Awakens, and Zootopia.

-Consumer Products/Interactive. revenue of $1.185B (up 2% y/y, 7% below previous estimates).

No change to Hold rating.

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 $97.82 yesterday.

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