Walt Disney Co (NYSE:DIS) — On June 1, after a rough week starting with the failure of its long-hyped movie Alice Through The Looking Glass, which brought in only half of projected revenues and was termed a “bomb” by The Wall Street Journal,” I recommended that speculators should sell Disney stock short at $100 with a target of $88.
DIS reached $91 on Sept. 15, closing yesterday at $93, where the short sale should be covered for a small profit.
Standard & Poor’s reported that it will keep its four-star “Buy” recommendation on Disney stock, with a 12-month price target of $110. The company’s June-quarter earnings of $1.62 per share exceeded S&P’s estimate by 2 cents, and revenues rose 9%, buoyed by its studio division which produces Captain America, Jungle Book, and Finding Dory. Domestic theme parks outperformed as well.
S&P will keep its 12-month target of $110 based on FY2016 and FY2017 EPS estimates of $5.82 and $6.23 (DIS has a FY ending Sept. 30), versus $4.90 last fiscal year.
Technically speaking, DIS appears to be making a bottom after a decline from $120 per share in November 2015. Sellers are diminishing, and the MACD indicator is arching up, a positive signal. Also, my CBR (proprietary indicator) issued three buy signals since mid-September.
Disney stock must first slice through resistance at its 50-day moving average and the bearish resistance line at $95 before it can claim a new uptrend. However, fundamentally and technically, for those willing to speculate on a DIS recovery, there is no better time than now to take a position in one of the most recognized names in the entertainment sector.
My trading target for DIS stock is $105 for a trading profit of about 13%.
