×
Pro Analysis

Disney, Time Warner downgraded on cable costs

Bob Iger, chairman and CEO of The Walt Disney Co.
Adam Jeffery | CNBC
Bob Iger, chairman and CEO of The Walt Disney Co.

FBR on Tuesday lowered its rating on both Disney and Time Warner to market perform from outperform, saying the companies will find it difficult to expand earnings in 2017 in their box-office and cable businesses.

"At this point, we see the [Disney] studio at peak earnings this year, a level that can be maintained going forward but probably not growing much from here," analyst Barton Crockett wrote in a note to clients. "Cable network earnings will be pressured in FY 2017 by the step-up in NBA costs. ... To us, this nets very little EPS growth for Disney in FY 2017, an environment in which we believe the stock will struggle to deliver much upside despite the quality of the company's content and theme park portfolio."

Crockett had similar concerns about Time Warner, "Our downgrade mainly reflects that TWX is within 3 percent of our price target, although we are skeptical that the recent election-driven ratings strength at CNN can persist into next year."