Walt Disney (DIS) - Get Report shares were lower on Thursday after Morgan Stanley raised its price target ahead of the entertainment group's fourth-quarter earnings report on Thursday after the close.
The investment firm raised Disney's price target to $160 a share from $135 and affirmed its overweight rating.
“With a supersized global streaming push and (hopefully) a vaccine ahead, we are confident fiscal 2021 will be trough earnings," analyst Benjamin Swinburne said. "Our confidence has increased in [earnings] scaling to new heights."
The firm expects streaming subscriptions for Disney+, and the company's other direct-to-consumer services, to more than double to 230 million in fiscal 2025 from 110 million at the end of fiscal 2020.
Revenue from direct-to-consumer is expected to triple to $30 billion over that time frame.
While the firm is bullish on Disney's DTC strategy, it says growth will require additional investment. And that investment, combined with a longer-than-expected covid impact on the Burbank, Calif., company's parks and film divisions, will lead to lower near-term earnings expectations.
"The recent vaccine news gives us a greater degree of confidence that this is the last material cut to parks estimates before a move towards normalization," Swinburne said.
["We] we have an increased degree of confidence in our expectation of reaching prior peak parks earnings by fiscal 2023."
Disney shares at last check slipped 0.3% to $137.46.