Options Trade – Walt Disney Co (NYSE:DIS) Calls 
Wednesday, November 05, 2014

**OPTIONS TRADE: Buy the DIS Jan 2015 90.000 call (DIS150117C00090000) at or under $2.80, good for the day. Place a protective stop loss at $1.10 and a pre-determined sell at $5.00.

by Ian Harvey

November 05, 2014


Walt Disney Co (NYSE: DIS), a diversified worldwide entertainment company, is scheduled to report its fiscal fourth-quarter results after the market close on November 6. Analysts have forecast earnings of $0.88 for the quarter, up from $0.77 during the same period last year. The stock ran into some selling pressure in October with the overall market, but has rebounded nicely, and is currently up 17.2% on the year.

Disney has a strong history of posting better-than-expected numbers, having outpaced analyst estimates each of the last seven quarters, and the last time it posted a negative earnings surprise was all the way back in May of 2011.

Disney's most recent quarter was strong, with the company benefitting from the blockbuster hit Frozen, which is likely to continue pulling in cash internationally for the company. In addition, big box office sales from other hits such as Guardians of the Galaxy and Captain America: The Winter Soldier, are likely to keep strength in the company's studio arm for the remainder of the year.

Technical Details

The Walt Disney Company has a one year low of $66.72 and a one year high of $91.98. The stock has a 50-day moving average of $87.92 and a 200-day moving average of $85.8. The company has a market cap of $154.7 billion and a P/E ratio of 22.02.


The Walt Disney Company last posted its quarterly earnings results on Tuesday, August 5th. The company reported $1.28 earnings per share (EPS) for the quarter, beating the consensus estimate of $1.16 by $0.12. The company had revenue of $12.47 billion for the quarter, compared to the consensus estimate of $12.17 billion.

During the same quarter in the previous year, the company posted $1.03 earnings per share. The company’s revenue for the quarter was up 7.7% on a year-over-year basis. Analysts expect that The Walt Disney Company will post $4.31 EPS for the current fiscal year.

Analysts Opinions

The Walt Disney Company (NYSE:DIS) had its price target upped by FBR Capital Markets from $97.00 to $105.00 in a research note issued to investors last Friday. The firm currently has an outperform rating on the stock.

The company has also been the subject of a number of other research reports:-

• Analysts at Guggenheim downgraded shares of The Walt Disney Company from a buy rating to a neutral rating in a research note on Thursday, October 16th. They now have a $87.00 price target on the stock, down previously from $96.00.

• Finally, analysts at S&P Equity Research reiterated a buy rating on shares of The Walt Disney Company in a research note on Tuesday, October 7th.

Seven analysts have rated the stock with a hold rating, twenty have issued a buy rating and one has given a strong buy rating to the company’s stock. The Walt Disney Company has an average rating of Buy and an average price target of $87.39.


Disney analysts remain optimistic and talk glowingly about the company's growth prospects for animation studio content into 2015. The company has ramped up their buyback program and insider selling evaporated on the recent pullback. The stock normally tests the 200-day moving average once each year and hadn't since late 2012, so was overdue. The company has beaten expectations by 11c to 15c the last three quarters.

Overall, things at Disney are running great, and analysts have forecast 10% earnings growth next year. Expect to see another better-than-expected quarterly report.

Therefore, based on the facts above the following options trade is recommended…..

**OPTIONS TRADE: Buy the DIS Jan 2015 90.000 call (DIS150117C00090000) at or under $2.80, good for the day. Place a protective stop loss at $1.10 and a pre-determined sell at $5.00.

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