Barclays analyst drops Disney stock to hold


It’s not that Anthony DiClemente dislikes The Walt Disney Company, but the Barclays Capital analyst notes that the shares have gone up in price by over 25% in the past three months, while the S&P 500 has gained only 11%. Thus, he has changed his overweight (buy) rating to equal weight (hold).

Disney now trades at a wider-than-normal premium to its peers, DiClemente noted in a research report. “Given this recent upward move, a plateau in positive EPS revisions, and a deceleration in growth, we believe risk/ reward in DIS shares is less attractive, and as such, we are downgrading shares to 2-Equal Weight,” he wrote. “Soft TV ratings trends at ESPN/ ABC, moderated future growth at the Parks, and an uncertain forward year film slate contribute to our hesitation at these levels,” the analyst added.

For the TV/cable side in particular, DiClemente had this to say to clients: “ESPN ratings ended the 4Q down -15%, following -14% in 3Q. We believe this ratings weakness, tough comps in 1H12, and moderated demand in the scatter market could pressure ad revenues; we are lowering our quarterly estimate for ESPN to flat growth (from +2%) accordingly. ABC ratings have also been soft as they are -8% in the season-to-date for the 18-49 demo.

DiClemente is sticking with his target price of $44 per share, which was further above the actual price when he first made that the target. The stock closed Monday (1/10) at $39.75.