3 Reasons Disney's Upcoming Film Schedule Is Good News For Investors

Walt Disney Co DIS treated moviegoers to a lineup of Marvel films through 2021 and the announcement is notable for investors for three reasons, according to Morgan Stanley.

The Analyst

Morgan Stanley's Benjamin Swinburne maintains an Overweight rating on Disney's stock with a $160 price target.

The Thesis

Fresh off a record-setting opening weekend for "The Lion King," the company continues to have a "strong chance of success" in the coming years for three reasons, Swinburne wrote in a note.

1. Disney wasn't sure if it would include Marvel content in its streaming platform, but Swinburne said it's now "clear" Marvel may be counted on to assume "the most critical role" in Disney+. Marvel films are no longer geared towards the typical "fanboy" and are loved by the mass market. Outside of the U.S., Marvel films have shown strong appeal.

2. Estimates call for Disney's pro forma theatrical revenues to fall 15% in fiscal 2020 and the recent lineup announcement should help support earnings growth over the coming years. It remains to be seen if Disney can live up to a "very high bar financially" and "The Eternals" stands the highest chance.

3. Disney's acquisition of 21st Century Fox assets was finalized at "full price" and the transaction could "come more into focus" in the near term. Swinburne said Disney's track record of acquiring film studios is stellar, but the company still needs to demonstrate financial success to prove the acquisition was wise.