Disney (DIS): Cutting PT On Numerous Issues - BofA

BofA/Merrill Lynch analyst, Jessica Reif Cohen, reiterated her Neutral rating on shares of Walt Disney (NYSE: DIS) and cut her price target to $125 from $134 on concerns that F3QE will reflect solid Theme Park and Consumer Products (CP) growth offset by elevated Cable Networks headwinds (due in part to Golden State Warriors strength/shorter post-season NBA play) and tough Studio comps.

Key positive issues the analyst is focused on include:

1) mid-single digit affiliate fee growth at Cable Networks

2) rising retrans at Broadcasting

3) a $90mn OI Easter shift benefit + attendance lift from Pandora: World of Avatar (Walt Disney World) and Guardians of the Galaxy – Mission: Breakout!(Disneyland) at US Theme Parks

4) Intl. Theme Park benefit from The Iron Man Experience (Hong Kong), Disneyland Paris 25th Anniversary and Shanghai pre-open expense lapping

5) Cars 3 CP contribution

6) $3bn in share repurchases

Key concerns:

1) soft ratings at Broadcast (adv. down low to mid-single digits)

2) unfavorable syndication comps at Broadcast (vs. last year’s How to Get Away with
Murder)

3) NBA step-up costs ($400mn) and five fewer NBA Playoff/Finals games at Cable Networks, (4) A&E headwinds + Hulu investment at Media Networks

5) new attraction pre-opening costs at Theme Parks

6) tough theatrical comps (Guardians of the Galaxy 2, Pirates of the Caribbean 5 and Cars 3 vs. last year’s Captain America: Civil War, Jungle Book and Finding Dory) and a tough home entertainment comp (Rogue One vs. last year’s Star Wars: The Force Awakens)

7) increased interest expense.

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 $104.22 yesterday.

You May Also Be Interested In

• BofA Securities Starts Dollarama Inc. (DOL:CN) (DLMAF) at Buy
• BofA Securities Resumes Williams-Sonoma (WSM) at Buy
• Oxford Industries (OXM) PT Lowered to $40 at UBS Amid Top-line Weakness