Wall Street Turns Bullish on DIS Stock
Walt Disney Co (NYSE:DIS) stock is one value bet that keeps on giving. DIS stock has maintained an uptrend through the economy’s thick and thin over the years. Seeing its promising fundamentals, Wall Street bears have finally thrown in the towel.
Disney stock received three positive analyst notes this week. Each one came with a different bullish case. Going through these analysts’ reports, one can easily see why Disney stock is poised for more gains.
First off, Morgan Stanley is bullish on Disney’s parks and resorts business segment, particularly because of the company’s biggest park opening this year—the Shanghai Disney Resort. Bear in mind that this segment is Disney’s second-biggest revenue-driver and posted nine-percent revenue growth in the latest quarter.
Recall that Disney has recently made a switch to a new pricing strategy for its parks, under which it will charge visitors differently during peak and low seasons. Morgan Stanley analyst Alexia Quadrani believes this strategy will help solve the overcrowding problem at the parks without hurting demand. Quadrani sees nearly 20% upside in DIS stock from its current levels, setting a price target of $118.00. (Source: “Disney Parks May Have Even More Upside, Says JPMorgan,” Benzinga, March 2, 2016.)
Following Morgan Stanley, Credit Suisse set an even higher price target for DIS stock at $130.00. Analyst Omar Sheikh is bullish on Disney’s biggest revenue segment of media networks. Sheikh very aptly pointed out that Disney owns a diversified portfolio of assets that will continue to pull in money for the company. His take is that the decline in Disney’s ESPN subscriber growth is a problem the company can easily fix.
Sheikh suggests two defensive strategies. The first is banning the usage of shared passwords for the online live streaming service “WatchESPN.” The second is re-bundling its product offering according to end-users. His report also highlighted four positive stats on ESPN. (Source: “Disney Investors: Stop Worrying About ESPN,” Benzinga, March 3, 2016.)
Finally, Piper Jaffray followed with an upgrade of Disney stock raising the price target from $105.00 to $120.00. Stan Meyers of Piper Jaffray is bullish on Disney’s studio entertainment and consumer products segments. These are relatively smaller than the other two segments mentioned above, but boast higher growth prospects. (Source: “Piper Jaffray Likes Disney’s Five-Year Film Slate; Upgrades Stock And Moves Target To $120,” Benzinga, March 3, 2016.)
Meyers points out that Disney studios have 24 new film titles coming out in the next three years, which could pull a compound annual growth rate (CAGR) of nearly 12.6% for the company. The analyst sees future episodes in the Star Wars franchise and upcoming Marvel titles to be strong revenue-drivers for the company in the coming years. He also predicts the consumer products segment to become Disney’s second-fastest-growing segment.
In a nutshell, analysts are viewing all of Disney’s segments as strong. One would be a fool to not see the exciting return prospects DIS stock potentially boasts this year and consider taking a closer look at Disney stock.