Why Disney has 21% Upside: Analyst

Walt Disney (DIS) has risen 26% this year, but the stock has more to grow, argues bank of America/Merrill Lynch analyst Jessica Reif Cohen. In precise terms, Cohen thinks the stock has 21% upside, and can reach $58 per share.

How?

Parks and resorts results should rise as operating margins reach pre-recession levels of about 16% driven by the opening of Disney California Adventure’s new Cars Land exhibit.

Free cash flow is set to jump as its parks capital budget drops.

Studio results have been very strong, and should continue to perform well under new chief Alan Hom. Avengers could single-handedly add 14 cents to EPS, more than offsetting the John Carter debacle.

Media networks should continue to post solid growth. “We continue to view these assets as a steady source of high single- / low double-digit operating income growth for the company due to solid affiliate fees and healthy advertising prospects, which should offset (if not outpace) aggregate cost growth.”

The Interactive division should be profitable by fiscal 2013.

Disney shares were recently up 4%.