Tuna Amobi, senior equity analyst at S&P Capital IQ, believes that although shares of Disney (DIS) trade at a premium price, the stock is a buy thanks to several catalysts that should propel it higher. Amobi says in all the years he’s covered Disney, he believes the company’s pipeline has never been more robust. He says the company’s catalysts are evident across all Disney’s core businesses — including its theme parks, television, movie studio and consumer products. In terms of risks to the stock, Amobi says one of the biggest concerns is consumer spending. Disney’s core business is tied to discretionary consumer spending, and U.S. consumer spending came in flat for April, something Amobi acknowledges is something to watch. With Disney’s ESPN benefiting significantly from the bundling of cable packages, as we see cable providers begin to unbundle some of their offerings, Amobi explains why a negative impact on ESPN’s revenue and therefore Disney’s business is not a concern to him. Although shares of Disney currently trade at a premium, Amobi stresses that he believes its valuation is warranted.
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