Imperial Capital Sees 'Far Clearer Vision' On Disney, Raises Price Target

Walt Disney Co DIS reported fiscal fourth-quarter results that shows the company transition from operating multiple "spinning plates" to operating with a "far clearer vision," according to Imperial Capital.

The Analyst

Imperial Capital analyst David Miller maintains an In-Line rating on Disney's stock with a price target lifted from $139 to $141.

The Thesis

Disney's management discussed its streaming video service during the post-earnings conference call and the "excitement on the call was palpable," Miller wrote in a note. Disney+ will launch Tuesday after a four-year long process that started with Disney's minority investment in BAMTech.

Despite high expectations, it's important to keep in mind Disney's stock has gained more than 25% since Imperial Capital established an Outperform rating on the stock. Also, Disney's stock has never traded north of an 18 multiple on the out year, but is trading now at 25.0 times 2020 GAAP EPS estimate of $5.61 and 18.8 times 2021 estimates of $7.05.

Despite a " far clearer vision" on how to operate its new direct-to-consumer business, Miller said any success is already "built in to the stock" at current levels.

Price Action

Shares of Disney traded around $137.78 Monday morning.

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