"Improved vaccination rates could help Disney continue to be a solid 're-opening' play, but with considerable multiple expansion ... we step to the sidelines," writes BMO's Daniel Salmon, making Netflix his top pick.
BMO Capital Markets analyst Daniel Salmon on Monday downgraded his rating on the stock of the Walt Disney Co. from "outperform" to "market perform," citing "considerable multiple expansion recently for both initial vaccine news and Thursday's direct-to-consumer investor day."
Following the event, Disney's stock hit an all-time high as Wall Street lauded CEO Bob Chapek and his team for strong execution and an attractive slate of streaming content.
In a report entitled "Now the Hard Part Begins," Salmon raised his Disney stock price target by $20 to $185, but highlighted that for him "Netflix retakes the top pick mantle."
However, while the analyst said he has decided to "step to the sidelines" for now, he also highlighted key positives for Disney. "We believe improved vaccination rates could help Disney continue to be a solid 're-opening' play," he wrote. "To be sure, the Disney+ sub forecasts surpassed the most bullish expectations, and were supported by an incredible amount of new content. But our favorite 'story' stock closes out this recommended chapter between direct-to-consumer investor days nevertheless."
Salmon noted that Disney raised its ESPN+ subscriber targets, "but there was otherwise relatively little on how Disney sees live sports and ESPN shirting to streaming." He added: "It proved moot in light of the Disney+ subscriber targets, but we expect this will be a question that continues to hang over ESPN/Disney, even if investors ultimately know there is a very different relationship with sports content versus general entertainment."
The BMO analyst also mentioned Disney's decisions on the theatrical and/or streaming distribution of films, including the Disney+ release of the live-action Pinocchio and Peter Pan & Wendy, and the theatrical release of Black Widow. "To our surprise, there was no new news on major films moving to Disney+ versus theatrical runs," he wrote. "Management held firm on its view that there remains a place for a strong theatrical window for tentpole films and will leave Warner Bros. to figure out how to quell talent's questions about back-end compensation for shifted films."
Salmon's price target increase was driven by his direct-to-consumer business price target going to $120 from $100, "while our core business target remains $65."
December 14, 2020 at 06:47PM
https://www.hollywoodreporter.com/news/disney-analyst-downgrades-stock-now-the-hard-part-begins
Disney Analyst Downgrades Stock: "Now the Hard Part Begins" - Hollywood Reporter
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
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