Pivotal Not Worried About Disney CEO And ESPN Concerns, Upgrades Stock To Buy

Pivotal’s Brian Wieser believes that Walt Disney Co DIS investors are pricing in several concerns, especially associated with the slowing of subscriber growth for ESPN, although there were also several reasons for optimism too.

Wieser upgraded the rating on the company from Hold to Buy, while raising the price target from $104 to $121.

Reasons For Optimism

Wieser pointed out that there were concerns regarding slowing subscriber growth at ESPN and uncertainties regarding leadership following the retirement of CEO Bob Iger and the fact that most of his successors would also depart the company.

At the same time, the analyst believes that the ESPN concerns are likely priced into the stock at present, while Walt Disney was likely to be able to manage the succession issue effectively.

In addition, there also were potential catalysts on the horizon, with the opening of Shanghai Disney Resort, schedule for June, as well as the “ongoing optimism around the growth of the studio this calendar year – both from new properties such as Zootopia and extensions of franchises such as the next Star Wars installment, Rogue One.”

Television Advertising

Wieser also expressed optimism regarding national television advertising during 1Q16, expecting mid-single digit growth during the quarter. Expectations for the remainder of 2016 were also robust.

In addition, local TV advertising was also expected to be strong, driven by political spending during the quarter.

International advertising might be impacted during 2016 due to the “the weak state of the global recovery in many markets.”