The direct-to-consumer space is likely to continue gaining strength and Walt Disney Co DIS seems well positioned to achieve a scale similar to Netflix Inc NFLX, according to UBS.
The Disney Analyst: John Hodulik upgraded the rating for Disney from Neutral to Buy, while raising the price target from $155 to $200.
The Disney Thesis: Disney’s global streaming subscribers could grow to more than 340 million by 2024, Hodulik said in the note.
Disney’s premium IP “creates pricing power and enables the company to spend less per sub on content, driving better economics over time,” he added.
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“We now expect DTC revenues to reach $43B in FY24, above our prior $27B and the street's ~$35B, with profitability in FY23. We believe this will support a DTC valuation similar to Netflix while Parks become a beneficiary of vaccine availability & pent-up demand for leisure travel in 2H21,” the analyst wrote in the note.
DIS Price Action: Shares of Disney had risen by 1.76% to $174.30 at the time of publication Friday.
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