Disney (DIS) Stock Downgraded at Guggenheim

Disney (DIS) stock was downgraded to 'neutral' from 'buy' at Guggenheim this morning.
By Rachel Graf ,

NEW YORK (TheStreet) --  Disney (DIS) - Get Report stock was downgraded to "neutral" from "buy" at Guggenheim on Monday, amid concerns about the cable industry.

The firm upped its price target to $115 from $114 on the stock.

Disney is "well-positioned" for a bigger over-the-top offering, in which media companies offer content online without requiring a subscription, but such a move would include "turbulence" for its shares, according to Guggenheim, Barron's notes. 

The number of cable subscribers is dwindling, as "skinny bundles" negatively affect bigger networks such as ESPN, Guggenheim said in a note, Barron's reports. ESPN is owned by Disney.

The firm expects about 3% variance among the industry's operating income before depreciation and amortization (OIBDA), and noted that it estimates the gap will widen in upcoming years due to declining subscriber numbers, Barron's adds.

Shares of the entertainment and media company are sliding by 0.15% to $114.67 in late morning trading today.

Separately, TheStreet Ratings team rates DISNEY (WALT) CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate DISNEY (WALT) CO (DIS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DIS's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 9.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.26% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DIS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DISNEY (WALT) CO has improved earnings per share by 10.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DISNEY (WALT) CO increased its bottom line by earning $4.90 versus $4.25 in the prior year. This year, the market expects an improvement in earnings ($5.64 versus $4.90).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 7.3% when compared to the same quarter one year prior, going from $1,499.00 million to $1,609.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Media industry and the overall market, DISNEY (WALT) CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • You can view the full analysis from the report here: DIS

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...