Barron's: Pixar (PIXR), too, attracted quite a bit of attention. Its next big feature, Cars, boasts the voices of Paul Newman and Owen Wilson, but won't reach theaters until June 9. Instead, the buzz centered on current talks between the animation studio and Disney (DIS), which some believe might extend beyond film distribution to a possible merger.
Leery analysts have long pointed out how a deal would be dilutive for Disney (which trades at 15 times 2006 earnings, versus 51 times for Pixar). A deal also could lead to a talent exodus, and "creative talent and a server farm would be the only thing Disney would be purchasing for about $6.5 billion, since it already controls the Pixar library," notes Deutsche Bank analyst Doug Mitchelson. Yet Pixar option volume surged last week, as shares climbed, and projected volatility soared to 47% from 29% a week earlier. Those who see limited stock upside -- Credit Suisse First Boston said Thursday that the shares already are "priced for perfection" -- might consider selling calls. |
