Disney (DIS) Stock Higher, Citigroup Dislikes Potential Twitter Deal - TheStreet

NEW YORK (TheStreet) -- Shares of Walt Disney Co. (DIS) - Get Report were up in mid-afternoon trading on Wednesday despite the fact that Citigroup said it dislikes the company's potential plan to acquire Twitter (TWTR), Barron's reports.

"We hope the press reports are wrong and Twitter is acquired by some other firm," Citi said of speculation this week that Disney could be bidding for the social media company.

The firm said it dislikes the deal because Internet mergers and acquisitions are historically fraught with challenges.

Additionally, Citi noted that Twitter's trends in monthly active users (MAU) and management turnover are "troubling," while it is "unclear" how content from Disney, a Burbank, CA-based entertainment company, could help the company.

Additionally, a bid for Twitter would hurt Disney's stock, Citi said. An all-cash offer would lower prices by $5 per share, while an all-equity bid would lower the stock by $9 per share, the firm estimates, Barron's notes.

However, a deal between Disney and Twitter seems to make sense on a "superficial level," the firm noted.

Twitter has been expanding into live video recently while Disney looks to shift its cable nets business online, Citi said.

But Citi added that "any way we slice the data, we just can't get enthusiastic about this potential transaction," according to Barron's.

Despite this, the firm maintained a "buy" rating on shares of Disney.

Shares of Twitter were slumping in mid-afternoon trading on Wednesday.

Separately, TheStreet Ratings objectively rated Disney stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rated this stock as a "buy" with a ratings score of B.

The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

You can view the full analysis from the report here: DIS

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