Tabell’s Market Letter – April 12, 1965

Tabell’s Market Letter – April 12, 1965

Tabell's Market Letter - April 12, 1965
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Walston &Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges TABEll'S MARKET lETTER OFFICES COAST TO COAST AND OVERSEAS April 12, 1965 WALT DISNEY PRODUCTIONS Current Price 53 Current Dividend 0.40 Current Yield 0.8 The Academy Award given last week to Julie Andrews for her performance in the delightful Mary Poppins warrants another look at Walt Long Term Debt 8,750,000 Common Stock 1,841,475 shs. Disney Productions, originally recommended by this letter in June, 1963 at 34 1/2. Despite the sharp rise in price since that time, the stock Revenues 1965-E 95,000,000 still appears to be a highly attractive capital Revenuee 1964 ,86, 000,..-. vehicle. '0 ., Earn. per Share 1965-E 4.50 The phenomenal success of Poppins ap- Earn. per Share 1964 3. 84 pears to assure a bright near-term future for Mkt. Range 1965-1963 571/2-261/4 Disney. Earnings for the first quarter of the fiscal year to end October, 1965 were 94 vs. 83, and the full impact of the company's new hit was not felt due to heavy initial distribution costs. For the full year, per share results could reach the 4. 50-4.75 range, making the stock available at a multiple of twelve times estimated earnings. On initial release, Mary Poppins is expected to gross 30 million, versus a negative cost of some 5 1/2 million. There must, however, be a reason beyond the current success of one picture to justify investment in Disney. There are, we believe, sufficient such reasons to make the stock at- tractive on a long term basis. 0 Disney has two major spheres of activity; first the p du an distribution of mo- tion pictures, and, second, the operation of the se t Park at Anaheim, California. Ancillary activities such as music and t Wonderful World of Color' television program (just extended through NBCY,'pr 'de a minor share of revenue. Disneyland continues to be a , a eady contributor to earnings, and r- the, – – ;)1lf ' uring1965IYis,however; motio-n' picture activities of Disney a greatest long range profit potential from the investor point 0 view Movie productio i e bess, and it is impossible to predict wha t the recep tion of future pro ' v!&fJe. is area, however, Disney has a number of factors in its favor not present the m companies. First of all, in live film production the eom- pany acts as producer ltS Own films, and is not forced to enter into profit-sharing contracts with highly a stars, directors and producers. This advantage also accrues to its production of animated films. Another Disney plus is the fact that most of its films are relatively low budget and, in most cases, the Disney name itself assures sufficient distribu- tion to insure at least a moderate profit. However, Disney's most important competitive advantage seems to be that its films are 0) essentially timeless and, (2), aimed largely at children. Every few years, therefore, there appears a new generation previously unexposed to the earlier Disney films. Since production costs are generally written off on initial release, re-releases are highly profit- able. Moreover, the number of films available for annual re-release will compound as the film library is built up. Thus, this year Disney will again introduce its highly successful 1950 production of Cinderella. In a,nothel' market, color television will provide a profit .. able outlet for the famous short cartoons of the 1930's and 1940's. Mary Poppins should contribute to revenues through 1965 and on into 1966 and 1967. Meanwhile, four new pictures either have been or will be released in 1965 and work goes on on others including an animated production of Rudyard Kipling's Jungle Book. From a technical point of view, Disney has an upside objective of 65-100, and is sug- gested for purchase in capital gains accounts. Dow-Jones Ind. 901. 29' Dow-Jones Rails 213.69 ANTHONY W. TAB ELL WALSTON & CO. INC. This market letter 18 pubhshed for our converllence and Information and 1; not an offer to sell or '1ohcltatlon to buy any securIties The In- formntlOn was obtained from sourCL'S we bLheve to I reliable. hut we do not gunrnntee Its nrcun\(') ,,'alston & Co, Inc and Ito; OffiC\.'1 s, directors or emJ)loyees may have an Interest In or purchase and sell the lecuntl('s referred to herein WN301 I

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