Analysts Still See Disney Stock as a 'Buy' Despite 'John Carter' Loss
NEW YORK -- Several Wall Street analysts said Tuesday that they continue to like Walt Disney stock despite the $200 million loss the entertainment giant projected a day earlier for John Carter.
Shares hardly moved in early trading, trending down 0.4 percent to $43.29 as of 1 p.m. ET. That was much closer to the stock's 52-week high of $44.13 set in May than its low of $28.19 in October.
"One-off charges at the studio segment are not indicative of the overall health of the company’s core businesses, namely the media networks and [theme] parks," Nomura analyst Michael Nathanson wrote Tuesday in one of the clearest expressions of belief in further upside at Disney. "We view any pullback in the stock around this higher film loss as an enhanced buying opportunity.”
In a note titled "Shocked, Shocked on John Carter," he lowered his earnings forecast but continues to rate the stock a "buy."
Similarly, Stifel, Nicolaus analyst Drew Crum said he is "still cautious on Disney's film slate." But he then emphasized that that studio is "financially not that important." Explained Crum: "While the studio serves as a creative engine for Disney's intellectual property, it comprised only 7 percent of fiscal year 2011 segment operating income and is only 6 percent of our fiscal year 2012 estimate."
Concluded the analyst: "While discouraged by another large film loss (last year, it was Mars Needs Moms), we're not deterred and continue to focus on the positives including media networks and parks -- nearly 90 percent of estimated fiscal year 2012 segment operating income."
Crum maintained his "buy" rating and has a $46 target price on Disney shares.
Said S&P Capital IQ analyst Tuna Amobi: "We expect the studio to rebound from the disappointing live-action sci-fi big bet that seemed to veer off Disney's core film strategy of branded family entertainment franchises, with several 3D animation rereleases on track plus Marvel's Avengers and Pixar's Brave set for a summer debut." He kept his "strong buy" rating on the stock.