Shares of the Walt Disney Co. hit a 52-week high last week after the company delivered a well-received quarterly financial report. While markets nose-dived, Disney -- perhaps assisted by a rush of positive analyst comments -- nearly held its gain, finishing the week a mere 26 cents off that newly set high.
"We believe the company should continue to experience better operating performance and momentum than many of the other large entertainment conglomerates," Prudential Equity Group analyst Katherine Styponias said.
Analysts seemed in agreement that most impressive were the results in television, driven by high ratings at ABC and ESPN, and theme parks also performed well, despite a surge in gas prices that has some pundits predicting economic gloom.
Revenues at Disney's media networks unit in its fiscal second quarter "were an eye-popping $3.55 billion, up 18% year-over-year and measurably ahead of our projection of $3.21 billion," Sanders Morris Harris analyst David Miller said.
Miller is also bullish on Disney's plan to sell radio assets to Citadel Broadcasting, which will leave Disney with almost no distribution presence beyond 10 TV stations, "which are not stock-moving assets," he said.
Selling to Citadel "has allowed Disney a higher multiple relative to its peers as all forms of distribution become marginalized over time," he said, raising his price target a dollar to $33.
Disney shares closed Monday at $29.99 and have advanced 21.6% so far this year.
Analysts were so taken by Disney's earnings report that even the company's weaknesses ?the movie studio and consumer products -- were hailed successes because not much was expected from those units.
The studio posted operating income of $147 million, down a hefty 39%, though analysts were forgiving because the company was up against tough comparisons from a year ago, when "The Incredibles" DVD was doing super business.
Disney will benefit this year, said Goldman Sachs analyst Anthony Noto, from "the most optimistic film slate since 2003," singling out the DVD releases of "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" and "Chicken Little," as well as theatrical releases "Cars" and "Pirates of the Caribbean: Dead Man's Chest."
"The fiscal-year 2006 studio entertainment film slate appears exceptionally strong," Cowen and Co. analyst Lowell Singer echoed.
Looking beyond the current year, Styponias was happy to hear Disney CEO Robert Iger confirm that "Toy Story 3" is in the works.
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