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Disney Positioning Itself For A Digital Future

Walt Disney Co DIS is positioning itself for the future, while supporting the current ecosystem, Brean Capital’s Alan Gould said in a report. He maintained a Hold rating on Walt Disney, saying that the company’s premium multiple would likely be “more modest” in the near term.

Taking Strides For A Digital Future

Walt Disney has agreed to acquire a third of video streaming company BAMTech, which has nearly 7.5 million client OTT subscribers. “A $3 billion price tag appears to be a healthy valuation for the business, and there will be some near-term dilution, but if it helps position Disney for the digital future it clearly makes sense,” analyst Alan Gould mentioned.

Walt Disney has the option to acquire a majority stake in BAMTech.

Current Ecosystem

While positioning itself for the digital future, Walt Disney is supporting the current multi-channel bundle. The company has inked an OTT deal with AT&T Inc. T, extended stacking rights to AT&T and Comcast Corporation CMCSA to enhance their traditional video offering, Gould stated.

The $5.5 billion Shanghai theme park opened successfully in mid-June and Walt Disney already has plans for the park's expansion.

Limited Upside

“Given the cord-cutting fears, which we believe are overdone but will not likely be resolved anytime soon, and the high bar in film earnings, we expect DIS' premium multiple will be more modest over the near term,” the analyst commented.

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DateFirmActionFromTo
Aug 2016MacquarieUpgradesNeutralOutperform
Jul 2016FBR CapitalDowngradesOutperformMarket Perform
Jul 2016Stifel NicolausDowngradesBuyHold

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