Walt Disney Company (The) (NYSE: DIS), Netflix, Inc. (NASDAQ: NFLX) – Why four analysts think Disney could thrive now and after the pandemic

The Walt Disney Company (NYSE: DIS) beat second-quarter expectations Thursday due to strong growth in its Disney + streaming service.

what happened: Disney reported $ 16.25 billion in revenue, well above the $ 15.93 billion street estimate, while the adjusted EPS reached a 32-cent loss, beating the Street estimate of a 41-cent loss . The company withdrew it despite the loss of revenue from its parks and cruise ships that were completely closed or open with reduced capacity due to the COVID-19 pandemic.

Disney’s biggest growth was in its stream subscriptions. The company reported that it secured 95 million Disney + subscribers for the quarter and now has more than 146 million paid subscribers. This term is the first time since the company ended its free trial.

Christine McCarthy, CFO, said executives were “very pleased with the conversion numbers we have seen here, from promotion to paid subscribers. McCarthy also said during the conference that the company ‘also set the goal for more than 100 new titles per year. And this across Disney Animation, Disney Live Action, Pixar, Marvel, Star Wars, Nat Geo. And, of course, we will continue to add more to our library as we go through time, ” which shows the company’s plan for growth in these areas.

The Disney analysts: Goldman Sachs analyst Brett Feldman reiterated a buy rating and raised the price target from $ 211 to $ 225.

Needham analyst Laura Martin reiterates a hold.

Morgan Stanley analyst Benjamin Swinburne reiterated an overweight rating and $ 200 price target.

Rosenblatt Securities analyst Bernie McTernan reiterated a buy rating and raised its price target from $ 210 to $ 220.

Strong growth in streaming, movies and park revenue: Goldman Sachs’ Feldman sees strong growth in 2021 due to demand in two main areas. First, from its streaming services, which he says will generate increased revenue when Disney raises subscriber prices in February and March. Feldman also noted the potential customer acquisition of Disney’s planned release of two Marvel movies this spring.

Second, Feldman believes park revenues will increase as demand for Disney-themed parks picks up. According to Feldman, Disney’s “core businesses are well positioned for rapid recovery as the economy reopens.”

Why Disney might surpass Netflix: Martin of Needham said Disney is only half of what is valued Netflix Ing (NASDAQ: NFLX) is though Disney beats Netflix at its only game.

Martin said Disney surpassed Netflix because of better marketing skills, stronger titles and the ability to save at subsidiaries such as Lucas Films and Marvel to save costs. Martin, like McTernan and Feldman, sees Disney benefiting from the reopening of the economy in 2021, which she says is not the case with Netflix.

Recovery long, but the worst is over: Swinburne of Morgan Stanley said that “although the road to recovery is still long and uncertain,” he believes the worst is over, and he expects revenue streams from Disney’s parks and cruises to continue to bounce back through 2021.

Swinburne also noted that Disney will reopen Hong Kong in the second quarter, pointing to better-than-expected retail sales at Disney stores for ‘Star Wars’, ‘Frozen 2’ and ‘The Mandalorian’ merchandise. Swinburne also said that Disney’s direct-to-consumer business exceeds expectations, and that Disney + is likely to reach 100 million subscribers soon.

Growing streaming services: According to Rosenblatt’s McTernan, Disney has managed to take advantage of the stay-at-home and reopening themes in its business by expanding its streaming services, while despite the pandemic, it has also beaten the theme park revenue estimate. More conservative: McTernan does not see park revenue returning to pre-pandemic levels until 2023, but has noted that it could be faster depending on the success of the vaccine vaccination.

DIS price action: Shares of Walt Disney Co. fell 1.70% to $ 187.67 at the end of the day on Friday.

Photo by Ella de Kross on Unsplash.