On Monday, CMB International Securities introduced coverage on Walt Disney (NYSE:DIS) shares, assigning a Buy rating and setting a price target of $142. The firm highlighted Disney's strong intellectual property (IP) and diverse portfolio as key drivers for its optimistic outlook. The analyst noted that Disney is poised to capitalize on the momentum in the streaming and sports industries, bolstered by effective cost-control measures.
After Disney reported favorable first-quarter results for fiscal year 2024, the company has demonstrated a considerable reduction in streaming losses, enhanced overall efficiency, and strategic growth in the sports sector.
Disney's management has projected earnings per share (EPS) of $4.6, reflecting a 22% year-over-year increase, and anticipates free cash flow (FCF) to reach $8 billion in FY24. Moreover, the expectation is that Disney's streaming services will turn profitable by the fourth quarter of FY24.
Looking forward, CMB International Securities forecasts a compound annual growth rate (CAGR) of 5% in revenue and 16% in earnings for Disney from FY24 to FY26. This growth is expected to be fueled by the introduction of ad-supported video-on-demand (AVOD) services, increased penetration of paid-sharing models, and the potential synergies from Hulu, along with the release of compelling new content.
The firm's initiation of coverage with a Buy rating and a $142 price target reflects confidence in Disney's ability to outperform in its streaming and park divisions. The optimistic stance is supported by Disney's strategic initiatives and the anticipated positive financial outcomes for the coming fiscal years.
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