Walt Disney (DIS) fairy tales always offer happy endings, even if they terrify six-year olds along the way. And Walt Disney shares might provide their own happy ending for investors, according to Guggenheim analysts.
Walt Disney Co./courtesy Evere Guggenheim’s Michael Morris and Currey Baker upgraded Walt Disney today to Buy from Neutral. To hear them tell it, it’s all about the content:
Enthusiasm for the company’s 2015/16 catalysts (Marvel/Pixar/Star Wars films and products, Shanghai park) has grown earlier than we anticipated in our 10/23/13 initiation, but we see no reason it will slow. Both Frozen and Thor 2 have performed well in F1Q, supporting the strengthening content story.
We see upward consensus estimate revision potential at several segments: Studio on a stronger slate and Netflix (NFLX) revenue (Marvel programming and film output); Consumer Products and Interactive on new characters and international growth; and Broadcasting on retrans/reverse compensation.
Better yet, Morris and Baker note, Disney trades at 15.5 times 2015 earnings estimates, putting it near the middle of the pack of S&P 500 stocks–”a bargain” in their opinion. They believe it should trade at 18 times 2015 earnings–or $87 dollars a share.
Shares of Disney have gained 2.7% to $76.33 today at 10:31 a.m., while Netflix has dropped 2% to $360.35.
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