The Walt Disney Co. and Marvel Entertainment are a couple of the hottest entertainment companies around, judging from their most recent quarterly financial reports. Just don't expect Wall Street to be impressed.
Since Marvel reported results on May 8 that by some metrics were "stellar," according to one analyst, its stock has retreated 8.9%.
And Disney, which bested the profit estimates of most analysts by a wide margin when it also reported earnings May 8, has since seen its shares fall by a more modest 1.6%.
If there were warts in either company's report, it was that Disney barely missed revenue estimates ($8.1 billion, compared with some expectations of $8.2 billion) while Marvel beat its estimates so badly that investors were disappointed the company didn't raise full-year guidance.
Marvel's first-quarter numbers "were significantly above expectation on both the top and bottom line," said Susquehanna Financial Group analyst Michael Kelman.
He called the company's full-year guidance "overly conservative, particularly given the recent boxoffice success of 'Spider-Man 3.' As such, we believe earnings momentum is likely to continue for at least the foreseeable future."
The analyst also likes the way Marvel has been aggressively buying up its own shares and could buy an additional $27.9 million worth under its current authorization. He also likes the prospects of "Iron Man" and "The Incredible Hulk" movies, due out May 2 and June 13, 2008, respectively.
SMH Capital's David Miller said Marvel's $151.4 million in revenue for the quarter was "stellar" and called full-year guidance "conservative." His target on shares, which closed Monday at $26.78, is $34.
As for Disney, Prudential Equity Group analyst Katherine Styponias was so enthusiastic about the company's fiscal second quarter that she upped her target $2 to $40. Shares closed Monday at $35.98.
Goldman Sachs analyst Anthony Noto said the company is "firing on all cylinders."
Bear Stearns analyst Spencer Wang was impressed enough to boost his full-year earnings-per-share estimate for Disney, from $1.78 to $1.84, but he also argued that shares are already fairly priced.
"While Disney continues to execute well, we maintain our 'peer perform' rating," he said.
The analyst said he "pegs a fair value for Disney shares in the low- to mid- $30s, in line with the current stock price. As a result, we see more attractive risk-reward in Time Warner and Viacom."