- Walt Disney (DIS +0.8%), reporting earnings after the close, could get more attention for what's happening in 2018 than today, according to UBS.
- Excluding an extra week in the quarter, analyst Doug Mitchelson sees EBIT coming in flat despite a number of challenges -- with help not only from theme parks but also ESPN (which UBS sees as offering steady affiliate fee growth).
- And fiscal 2017 offers a number of negative factors, the firm says, including "(1) NBA step-up ~$600m; (2) Fx hedging headwinds ~$250m; (3) tough film comp against Star Wars VII ~$400m; and (4) Pension/OPEB growth due to 44bp lower interest rates ~$100m."
- But positives include easy Shanghai launch cost comps, a boost from variable pricing at U.S. parks, the Netflix (NASDAQ:NFLX) deal and retransmission revenue growth and lower write-offs at ABC.
- "Post this difficult F4Q16, we expect investors will turn from FY17 growth concerns to anticipating FY18, where Disney’s film slate is unprecedented (4 Marvel, 2 Star Wars) and sports costs normalize," the team writes. "Further, affiliate revenue could accelerate modestly from virtual MVPD launches, annualizing the AT&T (NYSE:T) rate harmonization and mid-year CVC renewal."
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UBS: Disney focus will be on fiscal 2018
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