Disney Analyst Boosts Stock Price Target by $15 Based On Theme Parks Outlook
Let’s talk stocks on this Thursday afternoon Disney friends! According to a recent piece in The Hollywood Reporter, Michael Morris an analyst with Guggenheim securities raised his stock price target on the Walt Disney Company which now sits at $200. That’s up $15 because of a boost to the theme parks financial forecast.
According to Morris, this is due to a slightly accelerated recovery trajectory versus prior assessments. Morris wrote, “our parks forecast reflects a slower revenue recovery than current consensus estimates in fiscal year 2021-2023 and stronger long-term economic potential in fiscal year 2024 and beyond.”
Morris highlighted that he currently values Disney+ at $132 per share which is consistent with the Netflix valuation, its linear media business at $28 per share and theme parks and consumer products at around $80 a share. Tying all together Morris explained, “Corporate expenses and the impact of inter-segment eliminations are applied to these parts to yield our $200 price target.” He maintained his “buy” rating on the stock.
Looking specifically at Disney’s theme parks Morris highlighted, “Over the next two years, we expect [staff] and guest safety to be a primary segment objective and anticipate meaningful investment in related protocols and health measures. However, we also believe that the company has used a period of slower guest traffic to revisit all elements of cost infrastructure with a focus on efficiency and effective use of technology. Given that the segment was expanding margins … for several years prior to fiscal year 2020 driven by scale benefits, we believe our about 40 percent fiscal year 2025 segment target margin is not only achievable but may prove conservative.”
When it comes to theme park attendance Morris predicts a gradual recovery through 2022 saying that in the near future Guggenheims Disney World attendance tracker indicates an improved demand as we head into the fiscal first-quarter of 2021. This is due to expanded capacity. However, he added that any boost of theme park attendance at lease initially is expected to come from locals. Morris concluded, “We expect local demand to remain the primary driver of the initial wave of attendance return, limiting pricing power and resort occupancy. However, over the longer term, we expect demand to drive total economics above fiscal year 2019 peak levels.”
This is a story that we’ll continue to follow closely here at MickeyBlog. Readers are encouraged to keep checking back with us for further news and updates.
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Source: The Hollywood Reporter