JPMorgan Reiterates Disney (DIS) As a Top Media Pick for 2021, Here's Why

JPMorgan analyst Alexia Quadrani reiterated an “Overweight” rating and a $220.00 per share end-of-the-year price target on Disney (NYSE: DIS) ahead of FQ3 earnings.

Quadrani sees current levels as a “particularly favorable entry point for the long-term investor.”

“On the studio side, we continue to see Disney emphasizing theatrical experiences even after this weekend’s Black Widow PVOD success on Disney+ with Premier Access, and therefore we expect to see a more substantial improvement in theatrical revenues FQ4/F22 with the return of exclusive theatrical windows,” he said in a note.

As far as the Black Widow is concerned, the long-delayed Marvel spy thriller movie smashed pandemic records with a huge $80 million opening at the North American box office. Furthermore, Black Widow generated a further $60 million via the Disney Plus streaming service.

“We expect Disney+ subscriber growth to slow sequentially; we continue to estimate 110m subscribers in FQ3 although we update the mix between Disney+ and Hotstar. We expect incremental subscriber growth to be skewed to Hotstar due to launches in Malaysia and Thailand in the quarter. In FQ4, we anticipate greater Disney+ subscriber growth as Disney launches Star+ in Latin America on August 31,” the analyst added.

On the parks, he commented:

“The recovery is more firmly taking hold, with domestic capacity likely reaching normalized levels in FQ4 in our view as customers’ intent to visit has returned to 2019 levels at Walt Disney World; Disneyland Paris reopened on June 17, and all of Disney’s parks were open by the end of FQ3 for the first time following their closure from COVID-19.”

While the EPS estimate remains at $0.55, the analyst reiterated a “Top Pick” stance on Disney.

“We believe investors will continue to look past near-term core numbers as we do see ongoing improvements and eventual resolutions of challenges caused by COVID-19. Meanwhile, investors should continue to appreciate the exceptional growth in digital subscribers and Disney’s superior content,” the analyst concluded.

Shares of Disney are up 0.6% in today’s trading session.

For an analyst ratings summary and ratings history on Walt Disney click here. For more ratings news on Walt Disney click here.

Shares of Walt Disney closed at $177.04 yesterday.

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