Argus maintained a Buy rating on The Walt Disney Co. (NYSE: DIS) with a price target of $123. As expected, Disney’s June quarter was hurt by the reversal of a $176 million deferred revenue accrual in its Media Networks segment, though strong results across the board more than offset the tough comparison. Additionally, while Disney posted solid revenue growth and strong operating leverage in its fiscal third quarter, the market fixated on management’s downbeat guidance. ESPN, the most expensive basic cable channel, could be vulnerable as channel distribution modalities change, though in Argus’ view the market may also have overreacted.

The company reported its fiscal third quarter earnings on Tuesday and had $1.45 in earnings per share (EPS) on $13.1 billion in revenue, compared to Thomson Reuters consensus estimates that call for $1.42 in EPS on $13.23 billion in revenue. The same period from the previous year had $1.28 in EPS on $12.47 billion in revenue.

Looking ahead in December, Disney will release its new “Star Wars” movie, an almost certain blockbuster, especially with Disney’s vast publicity machine behind it. In early 2016, the company will also open Disney Shanghai, the newest park catering to the rapidly growing Chinese market.

Argus commented on Disney’s CEO, Bob Iger, in its report:

As Bob Iger moves into his last year as CEO, his priorities remain the same. The first is investing in high-quality branded content. The second is exploiting new technologies to distribute that content more broadly. The third priority is international expansion, exemplified most recently by the buildout of Shanghai Disneyland. We are impressed with Disney’s proven ability to leverage content through multiple channels, and see this as a differentiator relative to peers.

Disney boasts a remarkable five-year compound annual dividend growth rate of 30%. Argus’ fiscal 2015 dividend estimate is $1.81, representing the payment of the new semiannual dividend before the end of the fiscal year and the old annual dividend of $1.15 paid in January. The independent research firm has a fiscal 2016 estimate of $1.40.

As a result Argus raised its fiscal 2015 EPS estimate to $5.03 from $4.98, but is lowering its fiscal 2016 forecast to $5.40 from $5.52, reflecting management’s revised guidance. The forecasts imply 12% growth over the next two years. The long-term growth rate forecast is 10%.

Shares of Disney were down 0.4% at $108.14 on Friday afternoon. The stock has a consensus analyst price target of $121.96 and a 52-week trading range of $78.54 to $122.08. Disney shares have risen 15% year to date on a total-return basis, compared to a 2% increase for the S&P 500.

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