It's Early, But Wells Fargo Is Bullish On Shanghai Disney

In a recent report, Wells Fargo analysts Marci Ryvicker and Eric Katz reiterated a Market Perform rating on shares of Walt Disney Co DIS, arguing that while they are bullish on Shanghai Disneyland, it’s still too early to tell.

Shanghai Disneyland will open next Thursday. Ahead of the inauguration, Wells Fargo analysts said that, while they don’t believe Shanghai Disneyland will be an important financial catalyst on a standalone basis, it will likely generate opportunities like movies or consumer products over time.

Related Link: Disney Is About To Enter China's $180 Billion Media Industry

Having said this, they added that they don’t know when the benefits will be realized, or how much upside will the park bring. This means that they think ESPN will continue to be the main force driving Disney’s stock price for the foreseeable future.

Nonetheless, Ryvicker and Katz decided to update their model for Disney to incorporate their “more thorough Shanghai forecasts.” The experts increased their 2016 revenue forecast by 2 percent, and their 2017 estimate by 4 percent. On the other hand, they trimmed OI by 1 percent and 2 percent, respectively. Consequently, Wells Fargo had to reduce its already below consensus 2016 EPS forecast by $0.01 to $5.72, and their 2017 EPS estimate by $0.04 to $6.18.

Wells Fargo maintains an Market Perform rating and $95-$105 valuation range on shares of the Walt Disney Co.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.