We have maintained our long-term Neutral recommendation on
The Walt Disney Company ( DIS ) with a target
price of $53.00. Moreover, shares of Disney retain a Zacks Rank #3
Why the Reiteration?
Disney remains well positioned to drive revenue growth in the
coming quarters through its strategic initiatives as the company
continues to invest in its core businesses while expanding its
Despite a difficult operating environment, the company did not
change its strategies and remained focused on deploying its capital
toward broadening its Parks and Resorts business, and in turn
creating long-term growth opportunities.
Disney entered into several content distribution agreements with
Comcast Corp ( CMCSA ),
Netflix Inc. ( NFLX ), Cox
Communications and Charter Communications Inc . (
CHTR ), which
strengthen Disney's multichannel subscription model by adding more
platforms to deliver its content.
Going ahead, the company remains focused to generate increased
income from affiliate deals and retransmission renewals. However,
Disney listed a number of challenges that will negatively impact
its financials in the upcoming quarter.
The first quarter of fiscal 2013 will see an increase of $170
million in domestic sports right costs, while home entertainment
revenues are expected to remain low due to the difficult
year-over-year comparison as the first quarter of fiscal 2012
included robust performance of Cars 2 and the Lion King.
Further, macro headwinds, higher tax rate (2% higher than the
prior-year quarter) and effects of Hurricane Sandy are short-term
Other Stocks to Consider
Other stocks in the media & entertainment universe worth
considering are Time Warner Inc. ( TWX ), which holds a
Zacks Rank #2 (Buy) and News Corporation ( NWSA ), which holds a
Zacks Rank #3 (Hold).CHARTER COMM-A (CHTR): Free Stock Analysis
ReportCOMCAST CORP A (CMCSA): Free Stock Analysis
ReportDISNEY WALT (DIS): Free Stock Analysis ReportNETFLIX INC (NFLX): Free Stock Analysis ReportNEWS CORP INC-A (NWSA): Free Stock Analysis
ReportTIME WARNER INC (TWX): Free Stock Analysis
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