Disney Stock Soars As Analyst Updates Prediction
As the proud owner of nearly two and a half shares of Disney stock, Thursday’s market news had my heart going pitter-pat. Disney’s end of day price on Thursday hit $141.73.
Barrons attributed the nice 4.43% one-day uptick (30.06% year to date) to a couple of factors.
Disney Stock Soars
Walt Disney stock was up 2.4% near midday Thursday after one analyst updated his projections for the entertainment company’s direct-to-consumer streaming services, including Hulu and the forthcoming Disney+.
Morgan Stanley’s Benjamin Swinburne sees Disney with 130 million global streaming subscribers in 5 years, and its stock (ticker: DIS) trading at a premium to its market peers. He raised his price target to $160 from $135—a 14% upside from the roughly $140 the stock was trading at Thursday.
Ha! I’ll take it. But Benji isn’t telling this guy anything he didn’t know.
Revolutionizing the Revolution
I’ve been covering the Fox/Disney merger for some time, and Disney+ (in addition to The Walt Disney Company’s diversified direct-to-consumer streaming businesses) seem on the verge of revolutionalizing the digital revolution.
Barron’s Nicholas Jasinski added:
At an investor day on April 11, Disney announced its streaming strategy and set ambitious targets for subscriber growth, the content on its services, and expected time to profitability. The three-pronged strategy includes Disney+ for family and children’s programming, ESPN+ for sports, and Hulu, which Disney describes as targeting adult viewers… After modeling out the next half-decade of development of Disney’s streaming services, Swinburne sees more gains for the stock ahead. His base case estimate is for Disney to realize roughly the midpoint of its subscriber guidance—hitting 130 million users world-wide by the end of 2024.
In a report on Thursday, he called this target “ambitious but reasonable,” with the faster-than-expected global launch, the strength of Disney’s brands and franchises, and its plans to include third-party content all helping to attract subscribers. By comparison, Netflix ’s (NFLX) global subscriber base today is about 149 million.
An aggressive rollout comes with steeper near-term costs, however. Swinburne expects Disney’s streaming investments to detract more from earnings next year, but to become a net contributor to the company’s profit in the fiscal year ending in September 2024. He calculates $17 billion of direct-to-consumer revenue for Disney that year, and about a 20-cent gain to earnings per share.
What’s It All Mean?
Now, I was an English/History double major, but all that sounds pretty good, no?
But in all seriousness, the thing that has ME feeling pretty good as a DISNEY CONSUMER is that the company seems poised — not only to capitalize on its recent investments — but to be able to take some serious chances in programming and films thanks to not having to live “check to check.”
As a Star Wars junkie, I think the development of The Mandalorian, the “Cassian Andor” series, and the like are centered around Disney being able to look at its base and make some exciting and unusual choices. If you are a Marvel fan, well the same can be said for the Scarlet Witch/Vision series, Loki, etc.
Remember a few years back when Tomorrowland’s low box office killed Tron 3? Remember last year when Solo: A Star Wars Story’s ticket office take seemingly stopped several Star Wars anthology films short.
So, I for one am looking forward to the future of streaming. How about you? Will you subscribe to one or more servies? Tell us in the comments.