Needham & Company Maintains a 'Hold' on Walt Disney (DIS); FY3Q11 ROIC Trends
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Price: $106.85 +1.96%
Rating Summary:
35 Buy, 19 Hold, 4 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
35 Buy, 19 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Needham & Company maintains a 'Hold' on Walt Disney (NYSE: DIS).
Needham analyst says, "There is currently a 90% correlation between FY12E ROIC and current share prices. Highlights of DIS’s ROIC trends in the June 30, 2011 quarter include: 1. Capital spending is a lead-indicator of invested capital. Rising CapX implies a growing asset base, which can put downward pressure on forward-year ROICs. DIS’s total CapEx rose by $210mm y/y (up 40% yr/yr) to $716mm in the June quarter driven by capital spending growth at nearly all divisions, especially Parks."
"Parks capital spending rose 47% to $523M in FY3Q11, up from $355M in the prior year period. DIS is in the midst of a capital spending cycle as it launches two cruise ships and finishes its California Adventure re-design. Capital spending will be $1B higher in each of FY11 and FY12 vs FY10. Beginning in FY13 we expect the Shanghai theme park build-out to keep capital spending at historically high levels.�Consumer Products. DIS recently announced that it will accelerate its 2011 interactive store openings. By the end of 2011, DIS will have 60 new concept stores in 16 major markets in North America and eight countries. We expect this strategic decision to keep capital spending at historically high levels for this segment in FY12. 2. Investment in Film & TV. Disney has been using its investment in film and TV as a source of cash, suggesting a shift away from being a content creator."
For more ratings news on Walt Disney click here and for the rating history of Walt Disney click here.
Shares of Walt Disney closed at $32.31 yesterday.
Needham analyst says, "There is currently a 90% correlation between FY12E ROIC and current share prices. Highlights of DIS’s ROIC trends in the June 30, 2011 quarter include: 1. Capital spending is a lead-indicator of invested capital. Rising CapX implies a growing asset base, which can put downward pressure on forward-year ROICs. DIS’s total CapEx rose by $210mm y/y (up 40% yr/yr) to $716mm in the June quarter driven by capital spending growth at nearly all divisions, especially Parks."
"Parks capital spending rose 47% to $523M in FY3Q11, up from $355M in the prior year period. DIS is in the midst of a capital spending cycle as it launches two cruise ships and finishes its California Adventure re-design. Capital spending will be $1B higher in each of FY11 and FY12 vs FY10. Beginning in FY13 we expect the Shanghai theme park build-out to keep capital spending at historically high levels.�Consumer Products. DIS recently announced that it will accelerate its 2011 interactive store openings. By the end of 2011, DIS will have 60 new concept stores in 16 major markets in North America and eight countries. We expect this strategic decision to keep capital spending at historically high levels for this segment in FY12. 2. Investment in Film & TV. Disney has been using its investment in film and TV as a source of cash, suggesting a shift away from being a content creator."
For more ratings news on Walt Disney click here and for the rating history of Walt Disney click here.
Shares of Walt Disney closed at $32.31 yesterday.
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