The Case for Disney in 2018

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Walt Disney Co. (NYSE: DIS), or the Mouse House as some affectionately call it, did not have a strong 2017. Although shares only eked out a small gain for the year, this is still a company to contend with. Looking ahead to 2018, Disney may be facing some difficulty, but it stands to disrupt and continue to take market share.

The company is already on track to be the top U.S. studio in terms of domestic box office sales, and likely it will have a market share, by that measure, above 22%, which will put it ahead of the other big four studios.

Disney also will buy most of the assets of Twenty-First Century Fox Inc. (NASDAQ: FOXA) next year at a price of $52 billion. Taken together once the deal closes, these two studios owned by Disney could have a market share of domestic box office as high at a third of the U.S. total.

Because this acquisition is going through, Bob Iger will be taking a victory lap in his role as CEO. Originally, he was expected to step down in 2016 but this was pushed back to 2018, and then again to 2019. However with this Fox deal, Iger now will be staying through 2021 to provide a stable hand for integrating all the assets. Maybe Disney can find a replacement for him by then.

Disney also released its most recent Star Wars installment, “The Last Jedi,” in theaters worldwide earlier this month. So far the film has grossed nearly $400 million domestic, and about $815 million worldwide as of December 25, 2017. This number might be concerning to some as it’s not as strong as 2015’s “The Force Awakens,” but it still has already made the top 10 highest grossing films this year with less than two weeks in theaters.

Looking ahead, analysts are expecting Disney to have $6.21 in earnings per share (EPS) and $58.6 billion for its fiscal 2018 year.

The Dow Jones Industrial Average is up about 25% year to date, which compares to Disney’s 3.7% gain. However, in the past quarter Disney is up closer to 10%.

Shares of Disney were last seen trading at $107.56, with a consensus analyst price target of $112.11 and a 52-week range of $96.20 to $116.10.