BMO Capital Cuts Price Target on Disney (DIS) as Affiliate Fee Sentiment Remains Negative
BMO Capital maintained a Market Perform rating on Walt Disney (NYSE: DIS), and cut the price target to $95.00 (from $110.00), following the company's 1Q earnings report. Disney reported EPS of $1.63, beating the consensus of $1.45. Despite box office/Star Wars results that were well above elevated expectations, the story remains dominated by ESPN after Media Networks segment OI missed, owing largely to higher costs. Even after management noted a subscriber uptick at ESPN in recent months, affiliate fee sentiment remains negative, and the cost side is increasingly the focus of conversations.
Analyst Daniel Salmon commented, "FY1Q16 EPS of $1.63 beat our $1.50 estimate and consensus of $1.45. Revenues were also generally ahead of estimates, but segment operating income performance was mixed, with a notable miss in Media Networks, and also a slight one in thenewly combined Consumer Licensing/Interactive segment. Parks were nicely ahead, while Studio was well-ahead driving the EPS beat. Disney repurchased $2.4B of shares in the quarter and continues to expect to buy back between $6-$8 B in F2016."
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Shares of Walt Disney closed at $92.32 yesterday.