Shares of Walt Disney Co. bounded to a new 52-week high Monday after investment house Schroder & Co. returned the company to its recommended list after a two-year absence.
Disney stock, which has been moving back into favor on Wall Street for several months after hitting a low last fall, rose more than 7% to close at $39.44 as investors shrugged off the Mouse’s “Mission to Mars,” which flubbed its second weekend at the box office after a strong opening.
Disney shareholders fled the stock late last year as an ailing consumer products division eroded profits. Things are looking brighter now, many say, although a real recovery is still some time away.
“In Disney, it is necessary to be early,” Schroder analyst David Londoner said in a note to clients. “Now close enough to a turnaround in earnings, which will begin in earnest late this fiscal year, the stock should begin its next move over the coming months,” he added.
Earnings rise ahead
Londoner sees earnings rising 25% in fiscal 2001, which begins this October, and another 22% in 2002. One driver he cited was animated homevideo, which is coming back onstream after a rest of 18 months. The 26 films in Disney’s Classic Collection will be moving into continuous release this year and next, not to mention “Toy Story 2” and the upcoming “Dinosaur.”
He also expects rising theme park income, an uptick in consumer products and a continued resurgence of ABC, which has been flying high with gameshow phenomenon “Who Wants to Be a Millionaire.”