Disney: “The Force is Strong With This One”

We always love when analysts try to get clever, and Nomura’s Anthony DiClemente sure gave it the old-college try when he stuck that title on his report about Disney (DIS).

Walt Disney Co./Everett

As should be obvious, DiClemente is bullish on Disney. Very bullish. He explains why:

With perhaps the industry's most well-rounded and global stable of media brands, we believe Disney is positioned best to manage industry changes that are driven by digital technology. Why? Of any media company, we think Disney best monetizes content across multiple business segments; looking broadly at the Disney "halo effect," the synergies produced between the Studio, Parks, and Consumer Products segments are what defines Disney's "edge." Technology allows this effect to reverberate globally; while Disney's cable networks are primarily US.-focused, proliferation of mobile technology will also allow for Disney's content to touch many more customers at many more points of purchase. Although FY13 financial results were impacted by declines at Broadcasting and the Studio, we believe that further growth at ESPN and the theme parks will drive operating income acceleration in F2014E and generate consistent EPS growth in the coming years. At a historically reasonable valuation, we rate the shares Buy.

And what content Disney could be producing in the years ahead. DiClemente explains:

Following a year hampered by the financial burden of The Lone Ranger, we are expecting further success of Marvel and Disney's animation studio content (like its successful holiday release of Frozen) to drive an acceleration in studio operating income off a year that has created easy YoY comparables. This will serve as a prelude for the return of a Pixar film in 2015, followed by the much-anticipated Star Wars (Epidode 7) at
the end of 2015. Marvel, Pixar, and Lucasfilm content will reverberate throughout the Disney businesses, as international box office, consumer products, and theme parks are all poised to benefit from their halo.

So yes, Disney is a Buy, and DiClemente’s $90 price target suggests another 19% of upside from yesterday’s close, though it should be noted he also likes CBS (CBS), Twenty-First Century Fox (FOXA) and Discover Communications (DISCA).

Shares of Disney have dropped 0.1% to $74.34 at 2:34 p.m., while CBS has gained 0.3% to $60.80, Twenty-First Century Fox has risen 1.5% to $32.77 and Discovery Communications is off 0.1% at $82.61.