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Consumer discretionary

Walt Disney Co (DIS) Revenue Shift Suggests Slight Upside To Current Revenue Estimates – Needham

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Despite changes in revenue estimates from different segments, the overall picture remains unchanged for Walt Disney Co

Walt Disney Co. (NYSE:DIS) is likely to see a shift in its revenue across different segments. Needham and Company’s latest analysis of the said shift and its causes leads to potential upside of 0.3% to current estimates, however, owing to a higher level of spending it is not going to have any impact on company’s earnings.

According to Laura Martin, analyst at Needham & Company, the causes of the shift are; strong box office performance, an increased level of capital expenditure, ratings below expectations, Shanghai Disney Land pre-opening expenditure, Easter happening in Q3 this year instead of Q2, comps getting slightly more difficult and Forex headwinds.

The result of the shift in projection yields revenue of $13.96 billion suggesting growth of 7% y/y and implies a 0.3% improvement over the previous. The operating income projection is now $4.35 billion suggesting an increase of 6% y/y and is 0.4% decline from the previous estimate. The shift does not reflect any change in EPS estimate which remains at $1.60 and shows 10% y/y growth.

As far as the company’s studio entertainment segment is concerned it has performed rather well as Jungle Book, Finding Dory, Captain America and Civil War have been strong box office hits. The analyst expects the segment to deliver robust revenue growth in Q3FY16 of about 25% y/y as compared to his previous estimate of 23% growth with a revenue of $2.55 billion.

Cable segment is now projected to grow by 3%, broadcasting to decline by 3%, Park & Resorts revenue to grow by 6%, while Consumer Products revenue is expected to appreciate by 2%. Ms. Martin reaffirmed a Hold rating and believes that net revenue is likely to remain same.

The analyst opinion for the stock consists of 6 strong buy, 12 Buy, 14 Hold, one Underperform and one Sell rating. The stock trades at $97.81 with no visible appreciation or decline in the premarket session.

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