Disney Stock Gets An Upgrade From Wells Fargo
This morning we were talking about the strength of Disney stock — trading over $170 — without the benefit of a full-bore theme park operation. And we speculated about the strength of Disney stock, should the cosmic tumblers again align.
Well, one clue just hit the ticker, er, Google.
Based on Disney’s direct to consumer strength, one analyst from Wells Fargo upgraded the Walt Disney Company up to $201.
“All I Want for Christmas Is an Updated Model.” That was the title of Wells Fargo analyst Steven Cahall’s Wednesday report, in which he boosted his stock price target for the Walt Disney Co. from $182 to $201.
Disney’s stock on Tuesday closed at $170.45, giving the company a market capitalization of $308.6 billion. It has traded as high as $179.45 over the past 12 months.
Of course, without Hollywood in full operation and minus several working theme parks, that valuation relies squarely on Disney’s vaunted streaming services.
Among Cahall’s new targets are 335 million streaming subscribers by fiscal year-end 2024, comprised of 240 million for Disney+, 58 million for Hulu, 23 million for a planned Star international service, and 15 million subs for ESPN+.
The analysts also forecasts fiscal year 2024 direct-to-consumer revenue of $27 billion, “excluding Hulu Live + TV.”
Cahall also estimated “peak direct-to-consumer operating losses of $4.2 billion in fiscal year 2021 with break-even in fiscal year 2023 and $3.3 billion in direct-to-consumer operating income by fiscal year 2025.”
Hey, I could deal with a cool $27 billion. You.
However, Seeking Alpha added in one particular part of the Wells Fargo report:
Analyst Steven Cahall and team think success in streaming growth will be synonymous with share price appreciation in our view. “Streaming is a competitive market and general entertainment is less in DIS’s power lane vs kids/family. Shortfalls in execution on streaming could leave DIS’s earnings depressed without the requisite multiple expansion,” reads the WF update.
Way to hedge your bet, no?
But maybe that is what Hulu is for?
Keep it here, for the latest, folks.