How Much Is ESPN Worth? Not Enough to Make Disney Stock a Buy, This Analyst Says.

Walt Disney is about to give investors a clearer idea of ESPN's financials. The details could come as something of a disappointment, according to KeyBanc analyst Brandon Nispel.

Disney (ticker: DIS) is restructuring under CEO Bob Iger and ESPN will become a stand-alone unit. For the first time its full financials will be broken out from Disney's wider entertainment business, just as the company looks for external investors to help prepare for the sports broadcaster's streaming future.

KeyBanc's Nispel did the math and puts ESPN's value at about $30 billion currently but he compared it to a "melting iceberg", as he argued the broadcaster is set to struggle with an eventual transition to being primarily a streaming service.

The valuation is based on a forecast of ESPN's annual revenue at around $16 billion with a low-single-digit percentage growth rate. Nispel put ESPN's operating income margin in the low 20s percentage range, forecasting its annual earnings before interest, taxes, depreciation and amortization at around $3.79 billion currently.

The valuation is likely below current consensus estimates, Nispel noted. Analysts at Wedbush recently suggested Apple (AAPL) should look to acquire ESPN with a price tag of around $50 billion in order to supercharge its own streaming service.

"We don't believe it is likely Apple will acquire the business when valuations may be coming down in the future," KeyBanc's Nispel wrote.

Nispel also said ESPN's outlook could be further impaired if Disney's dispute with Charter Communications (CHTR) continues.

He kept a Sector Weight rating on Disney stock with no price rating. Disney shares were flat in premarket trading at $81.64 and are down 6% this year so far.