Disney+ Stands Out In Streaming Video Field, Says Bullish Truist Securities

Walt Disney Co DIS is a "core large-cap holding," as the company is positioned to benefit from the continued transition toward direct-to-consumer media content, according to Truist Securities.

The Analyst: Matthew Thornton initiated coverage of Disney's stock with a Buy rating and $175 price target.

The Thesis: Disney's streaming video platform Disney+ stands out in the crowded arena by offering a family-friendly service with unique brands, Thornton said in an initiation note.

Disney+ subscriber trends are "tracking well" in the final quarter of 2020 based on mobile app data and a recent launch in Latin America, the analyst said. 

Aside from streaming, Disney's live sports and news assets should contribute to a "differentiated holistic offering," he said. 

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The company's Parks, Experiences, Products business is a best-in-class global operator, but won't see a full recovery until fiscal 2023, in Truist Securities' view.

Yet pent-up demand for "higher-end" experiences and growing momentum should translate to a $35-billion revenue business with a 30% segment operating income margin over 10 years, Thornton said. 

Disney's management team also boasts the necessary knowledge in advertising; consumer products and merchandising; and M&A to reinforce its competitive position over the long-term, the analyst said. 

Disney is hosting its Investor Day presentation Thursday and the research firm said it's looking for six key updates:

• How sports fits into the long-term strategy and the international opportunity.
• How does the transition of news to streaming fit into the long-term strategy?
• Updates on film windowing, including Premiere Access.
• How Hulu + Live TV fits into the long-term strategy,.
• Are there any other cost and/or asset rationalization opportunities?
• Commentary on M&A and how it fits into the long-term strategy.

DIS Price Action: Shares of Disney were trading 0.17% higher at $154.62 at last check Thursday. 

Photo courtesy of Disney.