Media giant Walt Disney Co DIS saw its stock hit nine-year lows in August 2023.
Since that time, shares have rebounded and a key lingering negative item has been settled. With an activist battle ready to play out next week, here's a look at how recent wins by the company could minimize the potential for activist changes.
What Happened: Trian Partners CEO Nelson Peltz has been waging an activist battle on Disney that will be a major focus of next week's trading week, with Disney's shareholder meeting on April 3.
Peltz has nominated himself and another director for Disney's board of directors. Activist investor Blackwells has also made nominations to Disney's board and is pushing for changes in a separate battle against the media company.
Peltz argued that Disney shares have underperformed in recent years as a result of poor management and a lack of vision.
"Disney is the most advantaged consumer entertainment company in the world and should have had a ‘winning hand' in today's evolving consumer entertainment landscape, Disney lost its way over the past decade," Trian said in a presentation.
Trian said Disney lost its dominance at the box office and with animation, entered the streaming market late and made several ill-timed acquisitions.
Stock Performance: The bad news for Peltz could be the timing of his push and the shareholder meeting to vote on the board of directors comes with bad timing.
Disney shares hit new 52-week highs of $123.74 on Thursday and are now up 36% year-to-date in 2024. Shares are trading at levels last seen in August 2022 and the highest the stock has been since CEO Bob Iger rejoined the company in November 2022.
For shareholders and investors, the stock now looks like Iger's plan has been working.
Since Iger took back over the role of CEO, Disney shares are up 22.2%.
Benzinga previously reported an investment in Disney shares during Iger's past run as CEO from September 2005 to February 2020 was up 457.6%. During former Disney CEO Bob Chapek's run leading the media company, shares were down 27.4%.
Related Link: Disney Invests $1.5B In Fortnite Owner Epic Games In ‘Biggest Ever’ Gaming Entry, Posts Q1 Earnings Beat, Revenue Miss
Key Support: While Disney will need support from its shareholders, the company gained support from several key voices including the grandchildren of Disney co-founders Walt Disney and Roy Disney.
Disney also has the support of Star Wars creator George Lucas, who is a key shareholder in the company.
Along with key support, recent analyst notes and price target increases could signal support for the current management team. Analysts who would love to see changes at Disney would likely be waiting to issue new price targets until the battle is decided next week.
Here's a look at recent analyst ratings for Disney.
Barclays: Upgrade from Equal-wight to Overweight, raised price target from $95 to $135
UBS: Buy rating, raised price target from $120 to $140
Needham: Buy rating, raised price target from $120 to $145
DeSantis Settlement: Disney recently announced a settlement over legal issues related to the governing district of its Florida theme parks.
The media company was waging in a war with Florida Gov. Ron DeSantis over the Central Florida Tourism Oversight District.
DeSantis and Disney both declared victory in the settlement and Disney can now push forward with plans of spending billions of dollars to grow and expand its Florida theme parks.
This was previously a lingering issue for Iger and Disney that could have been a negative item highlighted by the activist investors. With the settlement, Iger has another win to celebrate for the company.
What's Next: Disney shareholders will vote on April 3 for Disney's board of directors.
It was reported by CNBC that Trian Fund Management withheld its votes for Iger when voting for the board of directors. The move comes in contrast with public statements of wanting to work with Iger going forward.
Investors and shareholders could see this move by Trian, which could still change its vote, as a potential heated battle if the board of directors is changed. Trian said that it supports Peltz, but its vote shows otherwise.
Disney used this item in recent comments encouraging shareholders to vote against Peltz’s nominees.
The appointment of Trian's nominees would see Trian push for changes that include spinning off or finding partners for the legacy linear television, focusing on margins for streaming and working on a succession plan for Iger, whose retirement is scheduled for 2026.
DIS Price Action: Disney shares closed at $122.36 on Thursday versus a 52-week trading range of $78.73 to $123.74.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
