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Disney's Dizzyingly High Share Price Suggests a Break-Up May Be Coming

Stocks in this article: DIS

NEW YORK (TheStreet) -- The Walt Disney Company (DIS) is the media and entertainment darling of Wall Street -- the stock keeps hitting new highs month after month.

Since the end of August 2013, Disney shares have advanced 45%. Year-to-date the stock is up more than 14% with few reasons to argue it can't add on a few more dollars-per-shares over the next 12 months. Shares were little changed on Wednesday at $86.69.

In spite of all the good news surrounding Disney, there might be just enough blood in the water to motivate activist investors to begin circling this meaty potential, like sharks eyeing their prey. Not lost of these predators is Disney's history of buying back shares from activist funds at above market prices in hopes that they'll go away.

Read More: Walt Disney Earnings Q2 Blog

During the past year at least 10 companies have repurchased blocks of shares from activist investors, including Dan Loeb and Bill Ackman according to FactSet SharkWatch. That's more than in the previous six years combined.

But activist investors may be looking for more than just a premium on the current trading level. Forcing Disney to spin off its cable-TV assets or theme parks might be the higher goal.

And for good reason: With an analysts' average consensus 1-year price target of about $90, Disney shareholders aren't looking at much upside potential. To make matters worse, at the recent price of $87.60, the 86-cent annual dividend yields less than 1%, a meager consolation for those who own the stock.

One of the biggest individual shareholders is CEO Bob Iger, who last reported ownership of close to 1.26 million shares, worth nearly $110 million. After the company's cable networks group fell 7% to $1.9 billion during the quarter ended June 28, investors including the CEO grew concerned.

It was the only Disney division that suffered a setback. All others had double-digit gains in operating income. For example, its movie-making segment experienced an impressive operating income, which more than doubled from the year-earlier period to $411 million, with revenue up 14% to $1.8 billion.

There's plenty of good news about Disney, including last weekend's strong opening of the movie Guardians of the Galaxy, which grossed $94 million in 3 days. This continued a five-year winning streak of profitable movies for Disney's Marvel studio. A sequel to "Guardians" is already planned for 2017.

In what could be a strong driver of future growth for the theme park segment are designs that should result in what the CEO called a "far greater Star Wars presence in our parks." The company's U.S. parks are flourishing with nice increases in both attendance and higher spending per guest.

Read More: Jeff Bewkes Flexes Muscles as Rupert Murdoch Seeks to Save Face

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