After Three Years, Cowen Reverses Disney View

LOS ANGELES (AFX) – What a difference, um, three years makes? OK, so maybe it took a while, but broker-age SG Cowen finally found a reason to get excited about Walt Disney Co. again. Cowen analyst Lowell Singer on Thursday upped his rating on the entertainment giant to buy after staying neutral on the Burbank, Calif.-based company for more than three years. "Our bullish view is driven by an expected significant year-over-year improvement in studio entertainment operating income in [fiscal 2006] and a still nascent recovery at ABC," Singer wrote in a note to clients. "We expect at least 15% out-performance versus the market over the next 12 months." The ratings upgrade, though it had little effect on slightly down Disney shares Thursday, con-tinues the string of good news the company has had since changing chief executives at the beginning of the month. The company appears to be patching up strained relations with animation partner Pixar and is embark-ing on new strategies to spread its content across a number of platforms. Disney also recently took complete control of Miramax, and plan far fewer releases under the label now that its principals, Harvey and Bob Weinstein, have left and started their own studio. Singer also said ratings at the ABC Television Network will continue to improve as the network still is in the early stages of its recovery. Further, concerns about pro-gramming costs at ESPN and operating margins at its parks already are priced into the company's stock. Singer estimates that the company's fiscal 2006 earnings per share will be $1.53. Analysts polled by Thomson First Call expect earnings will reach $1.48 for the year, which will end Sept. 30.