Thriving on the positive sentiment that followed the acquisition of Fox’s (Nasdaq: FOXA) assets recently, Walt Disney Company (NYSE: DIS) is garnering some bullish reviews from Wall Street. On Tuesday, research firm Cowen upgraded the entertainment giant’s stock to Outperform from Market Perform. The analyst also raised the 12-month price target by 28% to $131, citing the upcoming launch of video streaming service Disney+ and the new Star Wars. The stock gained about 2% in early trading Tuesday.
The analyst, meanwhile, expressed concern over the viability of the Fox acquisition. Interestingly, the upgrade comes prior to the company’s much-awaited investor day meet on Thursday, at which it is expected to provide updates on the acquisition of Fox’s entertainment assets and the video streaming service. The direct-to-consumer service will be launched later this year.
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.