Disney the ‘Blue Chip’ of Entertainment Sector: Pros
Entertainment juggernaut Walt Disney’s stock is riding the winds of widely popular content and fundamentals that make it the “blue chip of entertainment stocks,” two analysts said Friday.
In August, Disney reported lighter-than-expected revenue for the fiscal third quarter. The company also announced a $50 million loss Thursday based on weak ad revenue, putting pressure on its shares on Friday.
Nonetheless, analysts remain bullish on its prospects. Disney’s stock recently surged to new 52-week highs, based largely on the strength of its parks and resorts. The home of such iconic figures as Mickey Mouse and sports broadcasting titan ESPN remains enduringly popular with the public, they said.
Analysts told CNBC on Friday that partners are still falling all over themselves to pay for Disney’s content, while its movies — including the box office smash “The Avengers” — are reaping strong studio revenues.
“There’s a real revaluation cycle right now for content, they’re getting more money for their shows” from distributors and content providers, said Barton Crockett, Lazard Capital Markets senior analyst.
He rates the stock a “buy,” and has a price target of $56.
Calling Disney “the blue chip” of the entertainment world, Crockett said investors can “go to sleep at night comfortable owning Disney. We think you continue to own Disney, and you continue to own the group.”
The strength in its parks and resorts business has surprised some observers, given the weakness buffeting the world’s economy. Tony Wible, an analyst at Janney Montgomery Scott, said Disney is a “standout” amongst its peers.
“When you look at Euro Disney, it’s the hotbed for economic uncertainty and they still put up good numbers," Wible said. “I also think they’re better positioned than others from digital threats.”
—By CNBC.com’s Javier E. David
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where’s the US Dollar Today?
- Track Treasury Prices Here
Neither Crockett nor Wible own shares of Disney, but both of their firms make markets in the company’s stock.