Disney Surges on Positive Analyst Reports

(Disney article updated with stock information and additional analyst commentary.)

NEW YORK ( TheStreet) -- Walt Disney ( DIS) shares have reached a series of 52-week highs this week after Morgan Stanley raised its price target for the media and entertainment company to $44 from $43 and maintained its overweight rating on the stock.

Today shares rose almost $1 from yesterday's closing price and peaked at $39.98. More than 14.5 million shares have been traded today, up from the stock's 3-month average daily volume of 8.1 million.

On Tuesday, Disney surged to a high of $39 as nearly 21 million shares traded hands throughout the day. The stock closed up more than 3% at $38.99.

Morgan Stanley analyst Benjamin Swinburne increased his 2011 earnings estimate for Disney to $2.44 from $2.38, driven by cost reductions at its broadcast segment as well as revenue gains from its recent deal with Netflix ( NFLX).

Caris analyst David Miller also boosted his guidance on Disney. In a Jan. 3 research note, Miller upped his 2011 earnings estimate to 58 cents a share from his previously projected 54 cents. He raised his price target to $42 from $40 due to "stellar fundamentals at ESPN," which he says continues to prosper from affiliate fees and advertising growth on exclusive sports rights properties.

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Morgan Stanley's Swinburne agrees that ESPN will see overall revenue gains due to improving affiliate revenue growth, which accounts for 65% of ESPN's revenue.

Swinburne also expects Disney to benefit from its growing cruise line. On Tuesday, Disney introduced the Disney Dream, a 4,000-passenger cruise liner which cost more than $900 million to build.

Cruise line stocks have been gaining recently as analysts note that that demand for cruises has been improving. HSBC Global Research analyst Ben O'Toole says that the operators are further helped by slow supply growth.

O'Toole recently initiated coverage of Carnival ( CCL) and rival Royal Caribbean ( RCL). He opened coverage on Carnival with an overweight rating and $51 price target and gave Royal Caribbean a neutral rating and $43 price target.

The Dream is Disney's third ship in its cruise line fleet, following the Disney Magic and the Disney Wonder, which both launched in the late 1990s. Disney is currently working on a fourth ship, to be called the Disney Fantasy, which is scheduled to be complete by March 2012.

Disney joins a number of cruise operators, including Carnival and Royal Caribbean, in adding larger ships to their fleets.

Swinburne believes that Disney's presence in the theater will also continue to boost the company's overall performance.

"Although we continue to believe that the negative trends in the DVD market will pressure results in the overall film sector, we believe that Disney is uniquely positioned to capitalize on its film characters through consumer products sales," Swinburne said in his Jan. 4 research report.

In 2010, Disney scored billions of box office dollars with the three highest-grossing movies of the year, Toy Story 3, Alice in Wonderland and Iron Man 2.

Swinburne says that new movies always give Disney the opportunity to "refresh the parks with intellectual capital from the film studio," with new additions such as Cars Land, a new land at Disney California Adventure slated to open in 2012.

Morgan Stanley also upped its 2012 earnings estimate to $2.90 from $2.85. Disney is scheduled to release its next earnings report on Feb. 8.

-- Written by Theresa McCabe in Boston.

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