Guggenheim Lifts Ests on Disney (DIS) as 'Zootopia' Performance Drives Studio Results

Guggenheim reaffirms its Neutral rating on Disney (NYSE: DIS) and bumps-up EPS estimates for Q216 and FY16 amid strong box office results in the quarter. The firm's fair value estimate on Disney moves from $96 up to $102.

Analyst Michael Morris commented today, We have updated our Disney model ahead of the company's F2Q16 earnings in May. The primary change to our model for F2Q was driven by the strong global box office performance by Zootopia, partially offset by higher costs at Broadcasting. Our F2Q EPS estimate is now $1.41, up from our prior $1.39. Our FY16 EPS forecast is $5.73 up slightly from our prior $5.72.

Morris elaborated, Studio Entertainment received a surprise tailwind from the theatrical performance of Zootopia ($806 million global box office to date has well exceeded our $304mm initial estimate, with the film still yet to premiere in Japan). Our Studio forecasts now account for the Zootopia boost, partially offset by a $75 million The Finest Hours write-off and a tough home entertainment comparison for The Good Dinosaur versus Big Hero 6 in the prior year. We note Zootopia performed particularly well in China ($231mm box office to date), and the live-action re-boot of The Jungle Book opens on April 15 in China, with both films placing strong Disney IP in front of local audiences ahead of the Shanghai Park opening.

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