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Brand Face-Off: The Walt Disney Company vs. Twenty-First Century Fox Inc

Evaluating DIS and FOXA from technical and sentiment viewpoints

by 2/19/2014 1:41:39 PM
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While both The Walt Disney Company (NYSE:DIS) and Twenty-First Century Fox Inc (NASDAQ:FOXA) have posted gains over the past 12 months, the former has outperformed the latter by nearly 13 percentage points. To be specific, DIS shares have climbed roughly 42% year-over-year to perch at $79.03, and FOXA has advanced close to 30% in the same time period to trade at $32.88. A similar trend has been evidenced following the pair's recent quarterly earnings announcements. In fact, since DIS' fiscal first-quarter report on Feb. 5, the stock has jumped more than 10%, and even reached a record high of $80.00 in yesterday's session. Meanwhile, FOXA is currently on its way toward its all-time high of $35.75 (tagged on Jan. 3), having ticked about 3.7% higher since its fiscal second-quarter report released on Feb. 6.

Daily Chart of DIS since February 2013

Daily Chart of FOXA since February 2013

Though Walt Disney appears to be more deserving of bullish sentiment, it is Twenty-First Century Fox that has seen the most upbeat activity in the options pits of late. Over the past 10 trading days, the stock has racked up a top-heavy International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 9.42. In other words, speculators have bought to open more than nine calls for every one put during the last two weeks. Meanwhile, DIS' 10-day ISE/CBOE/PHLX call/put volume ratio of 1.54 ranks in the 34th percentile of its 12-month range, indicating calls have been bought to open over puts at a slower-than-usual rate during the past two weeks (at a margin of roughly 3-to-2).

On Wall Street, it is, again, Twenty-First Century Fox that has managed to score the most upbeat brokerage notes. Presently, FOXA boasts 16 "buy" or better endorsements, two "holds," and not a single "sell" or worse suggestion, along with an average 12-month price target of $38.86, representing expected upside of 18.2% to the shares' current perch.

Walt Disney has also received a fair share of "buy" or better ratings (13, to be exact); however, nine analysts maintain tepid "hold" recommendations. Plus, the consensus 12-month price target of $80.82 is just a stone's throw away from the equity's current price. As such, the door remains propped open for potential upgrades and/or price-target hikes in the near term, which could give the shares an additional boost.

With that being said, The Walt Disney Company (NYSE:DIS) may be poised for more significant gains than Twenty-First Century Fox Inc (NASDAQ:FOXA) in the near term, from a contrarian point of view. Therefore, DIS is the winner of this week's Brand Face-Off.

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