Disney Analysts Mostly Shrug off Earnings Shortfall

“We continue to see durability in TV, rock-star momentum in movies and an encouraging Shanghai park launch next month as factors to support the stock,” says one Wall Street observer.

Wall Street analysts on Wednesday sifted through Walt Disney’s latest quarterly earnings report and conference call commentary from late Tuesday, with many shrugging off the company's profit shortfall.

“3 Cents [per Share] of Noise Shouldn't Change Anyone's View,” FBR analyst Barton Crockett said in a report. “Disney does less to steer Street estimates than any other media conglomerate, yet its business is in some ways lumpier. Therefore, if the fundamental story is intact, it should not really matter if quarterly earnings miss by cents.”

He maintained his “outperform” rating on the company’s stock and left his $111 price target unchanged, but lowered his full-year earnings estimate by a penny. “We continue to see durability in TV, rock-star momentum in movies and an encouraging Shanghai park launch next month as factors to support the stock,” he concluded.

Pivotal Research Group analyst Brian Wieser echoed that sentiment in a report entitled “Noisy [Quarter], But Nothing Thesis Changing.” He slightly tweaked his forecasts, but said he continues to value the stock at $121 and maintained his “buy” rating.”

Drexel Hamilton analyst Tony Wible also maintained his “buy” rating, but slightly lowered his price target by $1 to $117, writing that Disney's “brands unlock long-term value that trump near-term hurdles.”

He explained: “Although the results will reignite fears around Disney’s exposure to the challenges facing the TV ecosystem, we still believe it is well-positioned through its ownership of major brands, a strong studio, broadcast hedges, and its ability to launch a premium digital network that would allow it to directly monetize its non-sports content.”

Jefferies analyst John Janedis has been less bullish on Disney’s outlook with a “hold” rating on the stock.

“Results were mixed with upside at parks/studio offset by weaker media and consumer results,” he wrote Wednesday. “With downside risk to cable segment [profits], tough studio comps and a deceleration in domestic park [profit] growth in fiscal year 2017 and beyond, we maintain our “hold” rating.”

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