The upgrade comes prior to the company’s much-awaited investor day meet on Thursday, at which it is expected to provide important updates
The analyst said Disney’s powerful product pipeline will drive growth during the remainder of the year, referring mainly to the forthcoming release of Frozen 2 and Star Wars: Episode IX, among others. While boosting the studio operating profit, the new services will also enhance the performance of the Consumer Products segment next year.
According to the analyst, the market is likely to receive the streaming service overwhelmingly, resulting in a sharp increase in subscription numbers that could exceed the consensus. In the long term, there is a high chance of the direct-to-customer unit becoming a global service on the lines of Netflix (NFLX).
Also see: Disney’s Q1 results beat estimates
Earlier, investor sentiment was dented by Disney’s lackluster performance in the first quarter when earnings declined 3% year-over-year to $1.84 per share amid flat revenues, hurt mainly by a double-digit fall in Studio Entertainment. However, the results came in above the estimates.
Currently trading close to their all-time peak, shares of Disney gained about 2% in the early hours of Tuesday’s session. The stock has moved up 16% in the past twelve months and 7% since the beginning of the year.