Following a victorious outcome in a contentious proxy battle, analysts at Wells Fargo predict that Walt Disney (DIS) is well-positioned to focus on executing its business strategy and driving growth. They foresee improved margins in Disney’s direct-to-consumer operations and stability in its sports division. Furthermore, initiatives such as paid account sharing for Disney+, the integration of Hulu content into the platform, and a potential settlement with Comcast for full ownership of Hulu this year are anticipated to contribute positively.
The analysts also highlight the potential for ESPN’s valuation to increase, fueled by the growing popularity of sports streaming and the upcoming launch of ESPN’s direct-to-consumer flagship service. They believe that ESPN can expect domestic top-line growth and stable operating income in the medium term.
However, the analysts emphasize two key execution challenges for Disney. Firstly, they believe that the company needs to enhance the quality of its studio output, particularly in light of a somewhat underwhelming upcoming slate for 2024. Secondly, they suggest that Disney’s board should identify and prioritize one or two potential successors to current CEO Bob Iger, who has been instrumental in the company’s success.
Wells Fargo has revised its earnings per share estimates for Disney upwards, projecting $4.75 for 2024 and $5.69 for 2025. Their price target for the stock has also been raised to $141, implying a substantial upside potential.
