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Disney (DIS) Banks on Theme Park Business for Growth

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There is no denying the fact that a strong performance by the Parks & Resorts and movie businesses have acted as catalysts for The Walt Disney Company (DIS - Free Report) , in a situation where the company’s ESPN has been under immense pressure. Further, the operator of Tokyo Disneyland, Oriental Land Co., believes that foreign visitors at the park will increase in an excess of double by 2020 to nearly 4 million, per sources.

Tokyo Disneyland attracted 8.5% of the foreign visitors out of 21.4 million in the year ended Mar 2016. Oriental Land Co. expects foreign visitors in Japan will increase to 40 million and the resort is expected to capture 10% of the visitors. The massive publicity which Disney got from the opening of Shanghai Disney Resort is likely to act as a catalyst for Tokyo Disneyland.

In June, the $5.5 billion Shanghai Disney Resort, The Walt Disney Company’s second-largest theme park and its first in Mainland China opened doors. The Hong Kong Disneyland, inaugurated in 2005, was Disney’s first foray into China. Theme park lovers in China will be able to enjoy attractions like Mickey Avenue, Adventure Isle, Gardens of Imagination, Tomorrowland, Fantasyland and Treasure Cove. The Disney Resort will also have characters with fresh stories made for the Chinese people apart from two hotels, a shopping area and 99 acres of lakes, gardens and parkland.

DISNEY WALT Price and Consensus

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Disney is focused on deploying its capital toward expansion of the Parks and Resorts business, thereby increasing its market share and creating long-term growth opportunities.

Disney is in the process of rolling out more themed attractions in parks and resorts. The company has high hopes for the Shanghai resort. Moreover, management stated that domestic resort reservations have inched up 5% year over year for third-quarter fiscal 2016 as of May 10, 2016. We believe Disney’s theme park business will drive the company’s top line higher in the coming quarters.

Disney carries a Zacks Rank #2 (Buy) and shares the space with the likes of Twenty-First Century Fox, Inc. (FOXA - Free Report) , Time Warner Inc. and Comcast Corporation (CMCSA - Free Report) .

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