Walt Disney: Color on Quarter (112.07)
FBR reiterates Outperform; $116 tgt. Firm notes that DIS's F2Q17 featured EPS that were a little better than we had modeled: $1.50, up 10% YOY, versus our $1.45 estimate (and the $1.41 FactSet consensus). However, the call also featured slightly cautious commentary on key TV secular issues in advertising and pay TV subs, which could stoke concerns that tend to weigh on DIS and peer multiples.
Needham reiterates Hold. Firm notes for FY2Q17, DIS reported revenue of $13.336B, up 3% y/y and 1% below their estimates, and EPS of $1.50 (up 10% y/y and 7% above our estimates). What they liked most about the call was $200mm lower CapX guidance, raised share repurchases, and higher operating FCF. In the near term, for FY3Q17, DIS stated that Cable Network cost growth would be 16%, driven by a $400mm step-up in costs related to ESPN's new NBA deal, followed by another $200mm rise in FY4Q17. In addition, margins at Parks should be under pressure in 2H17 owing to Pandora opening in Orlando, and Star Wars lands, and Guardians in LA, a hotel in Hong Kong, Shanghai 1st quarter profits, and 18 days of dry dock for one of DIS's ships.
RBC reiterates Outperform; $130 tgt. Firm notes DIS provided a strong set of results including a 5% beat on OI, and they bring estimates up. However, the company noted modest acceleration in sub losses. They think this no longer poses a grave danger to the thesis given the strength of non-cable assets. They maintain their target as the narrative evolves.
Shares of Disney are trading 2.3% lower at $109.45/share in pre-market trading