The massive box office success of The Walt Disney Company’s (DIS) 'Monsters University', the prequel to Pixar’s 2001 hit ‘Monsters Inc’ has created quite a buzz as it emerged as the highest grosser this weekend, leaving behind Brad Pitt’s ‘World War Z’.
'Monsters University' is Pixar’s 14th consecutive film, which opened as a top weekend grosser and generated approximately $82 million from ticket sales. Viacom, Inc. (VIAB) owned Paramount Pictures’ ‘World War Z’ took the second position and grossed $66 million, while Time Warner Inc.’s (TWX) ‘Man of Steel’, which was into its second week, generated $41 million in ticket sales.
Though it is a bit early to estimate 'Monsters University’s impact on Disney’s financials, yet we believe that the film carries enormous prospect and expect it to generate significant revenue for the company. The initial success also suggests that the film will augur well for the company’s studio entertainment division, which is expected to be adversely affected by the pre-release marketing expenses for The Lone Ranger during the third quarter of fiscal 2013.
Barring the near-term headwinds, we remain optimistic on the long-term prospects of the studio entertainment division as the segment has some big-ticket releases in its pipeline. We believe this Zacks Rank #3 (Hold) company remains well positioned to sustain its robust performance on the back of Parks and Resorts, as well as the Studio and Media Networks divisions.
Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, such as Walt Disney, ABC, ESPN, Pixar, Marvel Entertainment, Touchstone Pictures and now Lucasfilm, which offers a strong competitive advantage to the company and bolsters its well-established position in the market against other industry majors like Lions Gate Entertainment Corp. (LGF).
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