BofA Lifts Disney Price Target After Investor Day, Says Direct-To-Consumer Audience Could Hit 350M

BofA Securities raised its price target on Walt Disney Co DIS after the Mouse's investor day presentation.

The Disney Analyst: Jessica Reif Ehrlich maintains a Buy rating on Disney's stock with a price target lifted from $166 to $192.

The Disney Thesis: Disney's Thursday presentation made it clear that it's focused on a "direct-to-consumer strategy first" mentality, Reif Ehrlich said in a Friday note.

The company's "high quality" and "deep" IP library, coupled with its original content lineup, implies better-than-expected value creation for the DTC business, the analyst said. 

While DTC costs will reach $14 billion to $16 billion by fiscal 2024, part of it will be offset by price increases across multiple markets, including the U.S., Canada, Europe and elsewhere, she said. 

New revenue streams will also help offset higher costs from the launch of Star+ in Latam in June 2021, and Disney+/Hotstar in India and other Asian markets, Reif Ehrlich said. 

Disney now expects its Disney+/Star subscriber count to grow from 60 million to 90 million to as much as 230 million to 260 million, the analyst said.

This is on top of 50 million to 60 million paid Hulu subscribers and 20 million to 30 million ESPN+ subscribers.

All told, Disney's giant portfolio of "quality" content will generate as many as 350 million total DTC subscribers, she said. 

DIS Price Action: Shares of Disney hit a new 52-week high of $174.94 Friday and were up 13.09% at $174.87 at last check. 

Photo courtesy of Disney.