Not To Worry: Iger Still Disney Helmsman For At Least 2 More Years
Attention Disney investors: Don’t forget that the highly successful Disney Chairman and CEO Robert A. Iger has at least two more years to continue governing the company’s vast assets and properties, and lead the diversified entertainment company to further successes. So the ruckus and concern over the resignation of Iger’s heir apparent, Thomas O. Staggs, is quite overblown, if not totally unnecessary.
Disney’s board, to be sure, has the will and power to find a successor to Iger, even though his highly productive and pragmatically successful leadership will be hard to equal — and a huge challenge to follow. With Iger still at the helm, and help discover the next chief, investors and Disney fans should be assured that all will continue to run as “magically” as possible at the world of Disney.
Shares of Disney dived 1.86%, to $97 a share on Tuesday, Apr. 5, 2016, when Staggs’ departure was announced. But the stock has inched up a bit today, and some analysts expect the stock to recover and pile up gains as the company regains its footing in explaining why the situation isn’t all that grievous or alarming.
Whatever the reasons behind Staggs’ decision to quit, looking forward and reasonably expect Iger and the board to responsibly handle the task of selecting an heir-apparent would be the best focus for all so as not to distract management from making sure Disney continues to move forward.
Equity analyst Tuna Amobi of S&P Global Market Intelligence says a “broader mix of external candidates will now likely factor into the succession plans at Disney.” So he is maintaining his buy recommendation on Disney with a 12-month price target of $108 a share. His buy rating is based largely on his confidence that the momentum fueled by the “robust contributions” from the Star Wars film and consumer products businesses will continue despite a relatively tempered outlook for growth in cable affiliate fees.
“We think concerns with ESPN’s exposure to potential adverse shifts in the U.S. pay TV landscape seems overdone,” says Amobi. He expects broad-based products — both home grown, such as Frozen and Guardians of the Galaxy, and acquired, such as Marvel’s Avengers and Lucasfilm’s Star Wars — will support further momentum. “We see ample financial flexibility on further acceleration in free cash flow to support Disney’s total return initiatives and potential acquisitions,” says Amobi.
He sees consolidated revenues likely to grow 6.6% in fiscal 2016, ending Sept. 30, and 5.6% in fiscal 2017. And Amobi also sees continued growth in affiliate and ad revenues at the media networks, including ESPN, Disney Channel, and ABC, with strong attendance and guest spending at the domestic theme parks. And the analyst also expects a “thriving consumers products business on a very roust film pipeline, thanks to the Marvel and Lucasfilms acquisitions, including Star Wars.”