ZIP-A-DEE-DO-DOW; HIGH EARNINGS, STOCK SPLIT POWER UP DISNEY SHARES.

Byline: Dave McNary Daily News Staff Writer

Shares of The Walt Disney Co. surged Thursday for the second day in a row, reflecting Wall Street's faith that the entertainment giant will continue to post impressive results.

Disney shares, up 68 percent since late October, jumped 1 11/16 to 123 11/16 Thursday on trading of 8.6 million shares, six times the three-month average, following a gain of 5-1/4 Wednesday. During the session, shares traded as high as 127-5/8 in the wake of announcements of better than expected quarterly earnings, a 3-for-1 stock split and a 133 million share buyback program. How much higher can Disney go?

Two analysts - Jill Krutick of Salomon Smith Barney and Alan Kassan of Deutsche Morgan Grenfell - said Thursday their price targets are now 140, with Kassan saying the target could be met in as little as six months. Bear Stearns analyst Raymond Katz said Thursday he has an 18-month target price of 155.

Kassan carries a buy rating on the stock and Krutick issued a strong-buy rating Thursday based on her ``rising confidence'' in the long-term earnings outlook.

Krutick said Disney will continue to post strong results at theme parks - particularly with its just-opened Animal Kingdom - and will improve its movie results, citing strong expected performance from ``The Horse Whisperer,'' starring Robert Redford and due out May 15; ``Mulan,'' its animated comedy-adventure, due in June; and its November release of ``A Bug's Life.''

Analyst Jessica Reif Cohen of Merrill Lynch also issued a near-term accumulate rating Thursday.

Disney had hosted about 200 Wall Street analysts at Wednesday's opening of the $1 billion Animal Kingdom in its first such gathering in several years.

Analyst Arthur Rockwell of Rockwell Capital Management said the announcement of the split was a major factor in the price gains. When Disney announced its last split in February 1992 on a 4-for-1 basis, the stock rose approximately 2.5 percent.

``Theoretically, a split is meaningless but the public loves it because the stock is more affordable,'' he said.

After the market closed Wednesday, Disney reported a 22 percent increase in its profit for the second quarter ended March 31, beating Wall Street's estimates due to better than expected performances at theme parks and its ESPN division.

Rockwell said that the massive size of Disney - which generated second-quarter revenues of $5.24 billion - gives Chairman Michael Eisner and his management teams the flexibility to meet profit targets through relatively simple steps such as raising ticket prices or releasing hit movies to the home video market.

``Eisner can tweak the margin so easily, so if you're an analyst, you can't get bearish on this stock,'' Rockwell said. ``Obviously, the Street loves what it heard from Orlando.''

Happiest shareholder on Earth

BURBANK - The latest price gains in Walt Disney Co. stock have boosted its market capitalization - the entertainment giant's value if all 680 million shares of common stock were cashed out - to $84.1 billion.

That's a gain of $31.2 billion - or 68 percent - since Oct. 27, when a huge slide in the stock market knocked Disney down to 77 -3/4 for a market cap of $52.9 billion.

Disney's biggest stockholder, legendary investor Warren Buffett, owns 21.56 million shares for a 3.18 percent stake through his Berkshire Hathaway holding company. That means Buffett's investment, originally made in Capital Cities/ABC before Disney bought the network, has grown nearly $1 billion in value in six months to $2.67 billion.

- Dave McNary

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Photo: (1 -- color) Buffett

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Chart: Surging stock