Walt Disney Co. (DIS) - Get Report shares jumped higher Friday after analysts at UBS boosted their price target on the media and entertainment group, citing improved prospects for its parks division and the scale-up of its Disney+ streaming service.
UBS analyst John Hodulik improved his rating on the stock to 'buy" from 'neutral, while boosting his price target by $45 to $200 per share, citing the group's potential to challenge Netflix's (NFLX) - Get Report streaming dominance and reach 340 million global subscribers for its Disney+ service by 2024.
Hodulik said Disney's premium content gives it better pricing power than Netflix, while keeping its costs lower as it drives subscription growth. This should lead to revenues in the region of $43 billion in Disney's 2024 fiscal year, he said, a $16 billion increase from his prior forecast. Accelerated vaccine rollouts, as well as pent-up demand for travel and leisure, should provide an early benefit for the group's Parks division over the second half of the year. as well, Hodulik argued.
We expect Parks to approach historical performance and attendance metrics by FYE22 with higher margins LT given operational improvements implemented during the pandemic." Hodulik wrote, adding that Disney "remains the best-positioned traditional media company to compete globally with the internet giants as video consumption moves online."
Disney shares were marked 2.1% higher in early trading Friday to change hands at $174.85 each, a move that would extend the stock's six-month gain to around 48.5%.
Netflix said earlier this week that it added 8.5 million new paid subscribers over the fourth quarter, taking its global total past 200 million. The stronger-than-expected gains, powered by growth in Europe and Asia, offset disappointing fourth quarter earnings of $1.19 per share but were better reflected in a top line revenue total of $6.64 billion.
Disney will publish earnings for its first fiscal quarter, which ended in December, on Thursday February 11 , will analysts looking for a loss of 44 cents per share on revenues of $15.86 billion.
Disney recently said it was canceling its decades-old annual-pass program at its Disneyland and California Adventure theme parks in Anaheim, Calif., amid high levels of coronavirus and the current state-mandated shutdown of those parks.
The coronavirus forced Disney to close its theme parks, suspend its cruise-ship sailings, lay off thousands of employees and delay its film production schedule.