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Parks growth provides Disney optimism for Morgan Stanley

Published 06/21/2017, 11:13 AM
© Reuters.  Parks growth provides Disney optimism for Morgan Stanley
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  • Disney (DIS -0.3%) is seeing "skies clearing up" after months of dark clouds from ESPN, Morgan Stanley (NYSE:MS) says.
  • Theme parks will now contribute more to operating income than ESPN does, analyst Ben Swinburne and team note, and there's mid-teens growth in operating income ahead. The firm's sticking with an Overweight rating and sees 25% upside in its base case.
  • "Recent share performance (down 8% QTD vs. S&P +3%) and a sub-S&P P/E highlight concerns around ESPN, sustainability of Parks margins, and anxiety over F3Q results," they write.
  • Margins will expand due to a few key drivers, they argue: new theme park attractions including "Pandora: World of Avatar" and lands based on Toy Story and Star Wars; ramping Shanghai profitability; and upside in Parks margins from a heavy expansion of dynamic pricing.
  • Now read: Something Important Changed Last Week


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