Disney (DIS) Upgraded to Outperform at Wells Fargo; Prior Concerns Now Look 'Unwarranted'

Wells Fargo's Marci Ryvicker upgraded shares of Walt Disney (NYSE: DIS) from Market Perform to Outperform Thursday morning. She argues Wall Street's estimates now look conservative and sees a chance "the stock may actually break out of its current mid to high $40-range on this coming earnings call." Ryvicker boosted her valuation range on the stock from $44-$46 to $56-$58.

The analyst believes her past fears related to possible margin contraction at ESPN, rating challenges for kids' programs, catalysts which were widely known by the Street, and some fogginess related to shareholder returns now appear "unwarranted." Instead, Ryvicker pointed out parks are improving more rapidly than even bulls had been anticipating, The Avengers is looking strong, margins at ESPN may actually begin to expand, there's potential for long-term growth in free-cash flow, and the company has low ad exposure.

Ryvicker said should Disney miss expectations, and the stock pullback, this would be a "great entry point given our increased confidence in the long-term story."

The company is expected to report on Tuesday, August 7th.

Wells Fargo's Ryvicker boosted her EPS estimates as follows:

• Q3 from 92 to 93 cents;
  
• FY12 from $2.98 to $3.03; and
  
• FY13 from $3.42 to $3.58.

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

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