For a company exposed to many of the areas most affected by the pandemic, Walt Disney Co. he saw his stock hold up well, largely due to the company’s progress in video streaming and optimism about a possible reopening.
Now, with the company’s business slowly showing signs of improvement, including a surprise profit in Thursday afternoon’s earnings report amid lower-than-expected losses in theme parks and streaming, analysts are debating how it should reflect that impulse in action.
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they fell 0.8% in trading since noon on Friday, reversing an earlier gain of up to 1.5% to a daytime high of $ 193.85.
Mark Shmulik of Bernstein titled his note to clients: “How many times can investors be paid for the same thing?” He claimed that Disney shares, which have increased by 33% in the last year, already have prices in streaming opportunities and an economic recovery, without taking into account the risk.
Shmulik said investors appear to rate Disney +, the company’s streaming service, at more than 50 percent of Netflix Inc.’s NFLX.
the value of the enterprise, even if Disney + has a third of the subscriber base and half of the average revenue per user (ARPU).
“Of course, the market is future-oriented,” he wrote. “But even if someone thinks Disney will ‘get’ to the Netflix and ARPU sequels, there’s still a significant amount of time and risk for shareholders to be compensated (not to mention the negative free cash flow from now until then. ). ”
Shmulik has a market performance rating on Disney stock. It has raised its price target to $ 124 from $ 116, but the new target is still well below Disney’s recent price of over $ 189.
Moffett Nathanson analyst Michael Nathanson sees a mixed bag at Disney, including troubled old-fashioned television networks, a fast-growing streaming business, and a bucket of parks and film with potential for recovery as the COVID-19 crisis improves. He wrote that Wall Street’s “massively optimistic outlook” on the Disney + business has raised the stock to an all-time high since Thursday, despite challenges for other business areas and mixed data points within streaming.
While Nathanson was impressed to see that Disney has shown an incremental leverage in its direct business to consumers, with profits improving by $ 644 million to $ 1.5 billion in revenue growth, he added that the market seems too focused. on the rise of Disney subscribers, to the detriment of revenue trends. He estimates that Disney sees 45% – 50% of the incremental increase in subscribers to the Disney + Hotstar service in India, which generates much lower revenue per user than the regular Disney + service in the US
“For a segment in which investors use a multi-income price to capitalize on assets, we believe that these variations in the mix and [revenue per user] it should return to the spotlight at some point, ”he wrote, reiterating a neutral stock rating and lowering its price target to $ 175 from $ 180.
Others were more optimistic about the Disney story, including Macquarie analyst Tim Nollen, who highlighted Disney’s “decent” gains from lower-than-expected losses in direct consumer and park businesses.
“We believe that DTC’s success and cost-effective management have created Disney for a recovery in earnings, and the reopening of parks and cinemas should produce a cyclical comeback in 2H’21,” he wrote, while maintaining a higher rating and a price of 210 USD per stock.
Rosenblatt Securities analyst Bernie McTernan wrote that while Disney “benefits from staying home and reopening homework,” he was surprised by the progress made in parks in the last quarter. “The parks have returned faster than expected,” McTernan wrote, given the “high” demand during the holiday season.
“The risk indicates an increase to reach previous levels of profitability sooner than expected (FY’23),” he wrote about the parks, experiences and products segment. McTernan sees “long-term growth if Disney can regain pre-pandemic trajectory in leading ROIC [return on invested capital] trends in greater efficiency management ”, including through a strategy that uses prices to help reduce consumer demand.
It has a buy-per-share rating and has raised its target price to $ 220 from $ 210.
“While the Covid-19 pandemic has had an effect on DIS’s legacy businesses (theme parks, movies, media networks), we see considerable potential in a positive sense for the further launch of the widespread demand for widespread availability of vaccines, “CFRA analyst Aaron Siegel said, raising the price target to $ 220 from $ 190.
Disney shares have gained 37% in the last three months, as DJIA Dow Jones Industrial Average,
increased by about 7%.