For a company exposed to many of the areas hardest hit by the pandemic, Walt Disney Co. has seen its inventory hold up well, thanks to the company’s progress with the stream of video and optimism over the eventual reopening.
As the company’s business slowly improves, with a surprising gain in Thursday afternoon’s earnings report, amid smaller-than-expected losses in theme parks and flow, analysts are discussing how the momentum in the stock should be reflected.
Shares DIS,
is 0.8% lower on Friday than an earlier gain of 1.5% at an intraday high of $ 193.85.
Bern Shint, Mark Shmulik, titled his note to clients: “How many times can investors be paid for the same thing?” He argued that Disney shares, which have risen 33% in the past year, already have the potential for flow and an economic recovery price, without offsetting risk.
Shmulik said it looks like investors Disney +, the company’s streaming service, owns more than 50% of Netflix Inc.’s NFLX. appreciate.
operating value, although Disney + has one-third of the subscriber base and half the average revenue per user (ARPU).
“Of course the market is forward-looking,” he wrote. “But even if one believes that Disney will ‘catch up’ to Netflix subs and ARPU, there is still a significant time and risk for which shareholders must be compensated (not to mention the negative free cash flow from now until then). . ”
Shmulik has a market performance on Disney’s shares. He raised his price target to $ 124 from $ 116, but the new target is still well below Disney’s recent price above $ 189.
MoffettNathanson analyst Michael Nathanson sees a mixed bag at Disney, including unsettling television networks, a fast-growing streaming business and a bucket of parks and movie assets with the potential for recovery as the COVID-19 crisis improves. He wrote that Wall Street’s ‘massive optimistic view’ of the Disney + business increased Thursday’s share to another everyday high, despite challenges for other business areas and mixed data points within streaming.
While Nathanson was impressed to see Disney show increasing leverage in its direct-to-consumer business, with profits improving by $ 644 million to $ 1.5 billion in revenue growth, he also said that the market seems too focused on the growth of Disney subscribers, at cost. of revenue trends. He estimates that Disney sees 45% to 50% of its increasing subscriber growth from its Disney + Hotstar service in India, which yields much lower revenue per user than the regular Disney + service in the US.
‘For a segment where investors use a price-to-income multiple to value the assets, we think these variations are mixed and [revenue per user] will have to come back into focus at some point, ‘he writes, reiterating a neutral stock rating and lowering its price target to $ 175 from $ 180.
Others were more excited about the Disney story, including Tim Nollen, an analyst at Macquarie, who emphasized Disney’s ‘decent’ earnings, driven by slimmer than expected losses in direct consumer and park businesses.
“We believe that DTC success and effective cost management can make Disney successful in restoring earnings, and that a reopening of parks and movie theaters should deliver a cyclical surge in 2H’21,” he wrote. better performance score and maintain $ 210 price target. the stock.
Bernie McTernan, analyst at Rosenblatt Securities, wrote that Disney, while ‘staying home and reopening themes’, has been hit by the progress seen in the parks industry over the past quarter. “Parks bounced back faster than expected,” McTernan wrote, given “increased” demand for vacation time.
“The risk points upside down to reaching earlier levels of profitability earlier than expected (FY’23),” he wrote of the parks, experiences and products. McTernan sees ‘long-term rise’ as Disney recovers its pre-pandemic track to achieve higher ROIC [return on invested capital] trends of greater yield management, ”among other things through a strategy that uses prices to promote consumer demand.
He has a buy price on the stock and raises his price target to $ 220 from $ 210.
“Although the Covid-19 pandemic has taken its toll on its heritage businesses (theme parks, film, media networks), we may see a significant head on the further release of the pent-up demand for widespread vaccine availability,” Aaron Siegel , CFRA analyst, said. said when he raised his price target from $ 190 to $ 220.
Disney shares have risen 37% over the past three months than the Dow Jones Industrial Average DJIA,
increased by about 7%.