Disney (DIS) has taken a beating since the viral outbreak began. The shares are down by 28% year-to-date amidst a growing number of concerns regarding the heart of its business; Disney’s theme parks are shut, live action film production has been bought to a standstill, and there are no live sports to air.
But the house of mouse has just released some figures that could boost investors’ confidence. Last week, Disney announced its new streaming service, Disney+, has reached 50 million global subscribers, handily beating the estimates for the first quarter.
Rosenblatt’s Bernie McTernan believes Disney “is well on its way to become a dominant global streaming player for the long-term.” The analyst reiterated a Buy rating on Disney shares along with a $140 price target. The figure implies potential upside of 34%. (To watch McTernan’s track record, click here)
Disney+ only launched in November and already boasts a third of market leader Netflix’s global subscribers (according to end of CY19). Considering the global launch is still under way, with further expansion expected in Western Europe later in the year, in addition to launches in Latin America and Japan, the plan, according to the analyst, is ahead of schedule.
McTernan said, “We believe this suggests 39M subscribers at the end of the March quarter, ~15% above consensus estimates and ~5% above RBLT estimates. Furthermore, these results suggest to us subscribers for the end of June could near 70M or 52M excluding India. Globally, this would be ~50% above consensus and RBLT estimates. However, excluding India (which we do not include in our estimates and assume consensus does not either), the 52M subscribers at the end of the June quarter would be ~18% above consensus and ~12% above RBLT estimates.”
It is not surprising Disney’s new service is positioning itself as Netflix’s main rival for the Streaming King crown. Disney’s rich history of content, featuring countless animated classics, and its owner ship of blockbusting franchises such as Star Wars and Marvel, makes it ideally suited for the stay-at-home period, more so when considering the majority of its content is catered for family consumption. With Disney’s core businesses shut down and weighing on the balance sheet, the figures offer much needed respite and highlight the new segment’s importance.
The rest of Wall Street largely buys into what this media giant has to offer, as TipRank analytics reveal DIS as a Buy. Out of 23 analysts polled in the last 3 months, 17 are bullish on Disney stock while 6 remain sidelined. With a return potential of 30%, the stock’s consensus target price stands at $134.67. (See Disney stock analysis on TipRanks)
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