Walt Disney (DIS) - Get Report appears to have successfully joined the global transition from linear to streaming, a Morgan Stanley analyst said, affirming an overweight rating on the entertainment giant and lifting the target price to $170 from $160.
The "popularity of Disney IP combined with the global consumer shift to streaming ... is leading to Disney+ scaling more quickly than previously expected," analyst Benjamin Swinburne said in a Friday note to investors.
Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead, he said.
"While expectations for the fiscal first quarter ending paid subs may already be robust," Swinburne said, "that does not change the long-term conclusion that early traction suggests Disney's strategy is working, the product resonating, and the popularity of its IP unmatched across entertainment."
Swinburne said that in late March Disney is scheduled to launch in another 125 million broadband households across most of Western Europe, with the rest of the launches presumably to be complete in the summer. The rest of world markets, except China, would follow in 2021.
"The international distribution strategy continues to come into focus, with Disney and Canal Plus in France joining forces," he said.
"The extent of its partnerships across other European markets, including any role Sky might play in the UK, Germany and Italy, likely impacts the near-term subscriber and financial performance."
Swinburne said Disney could "continue to deliver solid margin expansion at parks and successful film monetization, particularly with its strong content slate and continued ability to monetize on successful franchises."
Disney shares at last check were 0.7% lower at $141.50.
The shares slipped after Disney, the world's biggest theme park operator, closed its Shanghai park to help prevent the deadly coronavirus from spreading.