NEW YORK (TheStreet) --Disney (DIS) reported weaker than anticipated earnings results for the 2016 fourth quarter after Thursday's market close. The multimedia entertainment giant posted earnings of $1.10 per share, missing estimates of $1.16 per share.
Revenue declined to $13.14 billion in the quarter, failing to meet Wall Street's projected $13.52 billion.
"This is really a tale of two companies. You've got the consumer-facing businesses; the theme parks, the studio, the consumer products business. The other side you've got is the cable side of the business," Stifel Nicolaus managing director Ben Mogil said on CNBC's "Squawk Box" Friday morning.
While the consumer-facing businesses at Disney are doing well, the cable side of the business remains uncertain.
"There you've got the challenge around ESPN," Mogil continued. "Since ESPN is the highest sub channel they have; it's going to be a tough challenge for them from that perspective."
ESPN subscribers have remained in focus since 2015 when the company admitted to seeing "modest" declines. Subscriptions at one of Disney's most prominent brands continues to be a concern.
However, despite uncertainties surrounding Disney's cable assets, Mogil was satisfied with the company's guidance for next year.
"I think they actually gave much more granule directional guidance and reset expectations for 2017 in a very good way," he said. "The next thing we're looking for is some level of the subs at ESPN not going positive, but actually getting less negative."
Overtime, Mogil thinks ESPN will develop into a more expensive product, partially distributed and available on OTT services.
Shares of Disney were higher in pre-market trading on Friday.
Separately, TheStreet Ratings objectively rated this 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 team rates Disney as a Buy with a ratings score of B. This is driven by a number of strengths, which the team believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks the team covers.
You can view the full analysis from the report here: DIS