Tuesday, February 07, 2006

The Disney Surprise

Shares of media & entertainment icon Disney (DIS) are moving sharply higher today after the company reported a strong number after yesterday's close.

We predicted that this would happen when we wrote about the stock Sunday night:

Disney's prospects seem to have brightened, lately, however. First, Disney has made a major push into mobile -- via ESPN and Disney Mobile, Disney will deliver a range of entertainment content to mobile phones and, in effect, open a new revenue stream.

Second, the recent announcement that Disney is buying animation powerhouse Pixar (PIXR) has left many wondering how large a role Steve Jobs will play in solidifying Disney's position in a digital milieu.

Lastly, Disney's weakest area is ostensibly its motion picture sector, but Narnia is the 28th top grossing picture of all time, a nice came-out-of-left field surprise; along those lines, Pixar's Cars (due out in June) is going to be a blockbuster, we think.

Analysts have been lowering their projections, which has left room for an upside surprise -- keep in mind that Disney has met or beat expectations for the last four quarters.

The Street also gave us that upgrade we told you was coming -- it came from CIBC, who upgraded Disney to Sector Perform.

We have $32 target price on shares of Disney, based on 2006 prospects the market chose to ignore in 2005.

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