HULT Private Capital Sees Disney Writing A New Comeback Story

After a long cold winter that started in March of 2020 with the COVID-19 pandemic, it seems that Mickey Mouse and the company are writing their own comeback story. We sat down with Alex Mckenzie, a leading analyst at HULT Private Capital who follows Disney, to discuss the recent increase in Disney’s stock price.

HULT’s Mckenzie began our interview by saying, “Things are looking good for Walt’s old company, the entertainment and media giant reported their third-quarter earnings and revenue on August 10th and both beat analysts’ expectations. Unsurprisingly the company’s results got a good revenue boost from their Disney+ streaming platform subscribers, which came in above analysts’ es mates.”

The good news has had an immediate and lasting effect, on Disney’s stock price, the stock price was at $108.13/share before the news and after its release, Disney saw its share price rally more than 9% in the premarket. Moreover, it has risen to and stayed over $122/share since August 15th.

Disney’s earnings and revenue press release can be found HERE

HULT Private Capital’s Mckenzie went on to say that he and other analysts have cheered the results of the report. “The third quarter report will so en many analysts’ and investors’ fears. Disney+ is finally moving toward a modified subscriber model that will work better in the long run. When Disney+ launched in November of 2019, it was offered free to Verizon cell phone subscribers for a year. This was particularly useful when the COVID lockdowns kept kids and adults inside looking for things to do. When the year ended Disney+ saw a huge number drop off, offering only an all-or-nothing subscription. It has since modified this, tightening and trimming its subscriptions, adding an ad-supported er along with price increases and content rationalization for its customer base. These changes result in a much improved long-term profit outlook for Disney.

”Disney+ now o ers a $7.99 a month or $79.99/yr plan, with the ad-sponsored plan to be lower cost released later this year. There are also plans that bundle HULU and ESPN+.

HULT Private Capital’s Alex Mckenzie said that HULT currently has a Disney price target of $145 per share, which is up from the $125 it had previously. This new target is the same as that of Wells Fargo’s Stephen Cahall. Kutgun Maral of RBC Capital Markets has put Disney as one of his top picks and praised the company for its ability to navigate the theme parks through such a challenging economic environment. Disney’s parks have made technology, capacity, and guest management improvements that have created cost structure efficiencies allowing them to see success in the face of a recession.

HULT Private Capital’s Alex Mckenzie ended our interview by saying that “Disney is in good company; of the 150 S&P500 companies that have reported earnings, 75% have surpassed earnings expectations. Some of these companies are both beating expectations, and since posting their results, have seen their earnings prospects improve.”