Disney's (DIS) Q2 Results Not as Bad as it Looks, Says Deutsche Bank

Deutsche Bank maintained an Hold rating on Walt Disney (NYSE: DIS) with a price target of $113. Shares weakened following the release of disappointing Q2 results, but analyst Bryan Kraft doesn't think earnings were as bad as it looks.

The analyst explained, "We don’t think, at this point, that the implications for the forward outlook are as negative as the results might make it seem at first glance. In Media Networks, affiliate revenue growth was in line to better than our estimate of 3.5%, while advertising was lower. However, the advertising outlook in F3Q is unrelated to the College Football BCS issues (comps and make goods) that affected the F2Q decline. Broadcasting was stronger than expected, driven by higher ad revenue and lower expenses. Recent box office performance of Jungle Book and Captain America implies upside to what we think the market’s expectations were prior to release. Our Parks model already reflects a sharp slowdown in revenue and OI growth in F3Q and F4Q; driven by comps (Easter in F3Q15, extra week in F4Q15) and, increased Shanghai pre-opening expenses and post-opening start-up losses."

"The one area in which we think there are negative implications for at least the near-term consensus outlook is Consumer Products & Interactive Media, which missed our OI estimate pretty materially (18%). However, Consumer Products & Interactive Media is an inherently volatile business from quarter to quarter," added the analyst.

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 $106.60 yesterday.

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