Disney Share Repurchase Could Balance Pixar Buy
Forbes - 5/19/06

Disney Share Repurchase Could Balance Pixar Buy

Morgan Stanley raised its price target on shares of the Walt Disney Co. to $31 from $28, saying the cost of the Pixar acquisition will likely be offset by management's accelerated share repurchase program.

Analyst Richard A. Bilotti said the dilution of roughly 10 cents per share from Disney's acquisition of Pixar Animation Studios should be offset by the repurchase of $500 million-worth of Disney shares in the second quarter and the planned repurchase of even more shares in the second half of the year.

Along with raising the price target on company stock, Morgan Stanley increased its fiscal 2006 revenue estimate to $34.57 billion from $33.97 billion, as well as its 2007 revenue estimate, which rose to $34.46 billion from $33.94 billion.

Bilotti said much of the upward revenue revision was driven by upside to Disney's U.S. theme parks. The other factors included a stronger forecast for home video in the second half of the year, better margins in broadcasting and cable television, as well as affiliate fee growth in cable.

"We continue to believe that Disney's shares are fairly priced relative to the broad market," Bilotti wrote in a research note Friday.
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