Rosenblatt: Disney+ Subscriber Expectations Are Growing

Walt Disney Co DIS could have about 20% more subscribers for its Disney+ streaming service than initially expected by the end of the first quarter of 2020, Rosenblatt Securities said Thursday. 

The new streaming service could have 25 million subscribers by that time, Rosenblatt said, citing its own survey, up from the 21 million previously forecast.

The Analyst

Bernie McTernan reiterated a Buy rating and $175 price target on Disney.

The Thesis

McTernan wrote in a note that survey respondents are showing higher awareness of the service, and signaling higher penetration as well. The survey found 96% awareness of Disney+, up from 89% at the end of November, and nearly six in 10 people surveyed said they planned to subscribe. For the full year 2020, McTernan raised his estimate for Disney+ subscribers from 35 million to 39 million.

"Importantly, penetration was still high in households without children, with 43% indicating they subscribe to the service, potentially benefiting from the viral nature of The Mandalorian and Baby Yoda," McTernan wrote in a note.

Impact On Netflix

About 30% of Disney+ subscribers said they unsubscribed from another streaming service when they went with Disney. Just under 10% specifically said they'd dropped their subscription to Netflix Inc. NFLX.

"While we expect Netflix to be a long-term secular winner as it maintains its global streaming market share, we see the potential for near-term disruption as new streaming services launch," McTernan wrote.

Price Action

Disney shares were up on Thursday, trading higher by 1.4% at $146.65.

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