You can convert the output of any shell command or pipeline to a string by using backquotes (`).
For example, say you wanted to use some l33t encryption on some data, then send it to a variable for later use.
$ export SECRETDATA=`echo data | rot13`
$ echo $SECRETDATA
I'm not exactly clear on why you want to do this particular thingy, but whatever, I'll tell you how you could do it. Use cut, not sed.
$ export $DISPLAYHOST=`echo $DISPLAY | cut -f1 -d:`
This sets $DISPLAYHOST to the first colon-delimited field of $DISPLAY.