Disney Analyst Boosts Stock Price Target to $201 on Streaming Outlook

Walt Disney CEO Bob Chapek at the company’s investor day 2020

Walt Disney CEO Bob Chapek at the company’s investor day 2020

"All I Want for Christmas Is an Updated Model," says the title of the report from Wells Fargo's Steven Cahall.

"All I Want for Christmas Is an Updated Model." That was the title of Wells Fargo analyst Steven Cahall's Wednesday report, in which he boosted his stock price target for the Walt Disney Co. from $182 to $201.

Disney's stock on Tuesday closed at $170.45, giving the company a market capitalization of $308.6 billion. It has traded as high as $179.45 over the past 12 months.

Maintaining his "overweight" rating on the shares, Cahall said he was updating his financial model for the Hollywood giant, led by CEO Bob Chapek, after its recent investor day, where the company raised its streaming subscriber forecast. "We revise our estimates for the direct-to-consumer ramp," he said.

Among Cahall's new targets are 335 million streaming subscribers by fiscal year-end 2024, comprised of 240 million for Disney+, 58 million for Hulu, 23 million for a planned Star international service, and 15 million subs for ESPN+.

The analysts also forecasts fiscal year 2024 direct-to-consumer revenue of $27 billion, "excluding Hulu Live + TV."

Cahall also estimated "peak direct-to-consumer operating losses of $4.2 billion in fiscal year 2021 with break-even in fiscal year 2023 and $3.3 billion in direct-to-consumer operating income by fiscal year 2025."

Cahall called Disney a "long-term media story," arguing: "Given Disney's long-term guidance we expect a gradual rotation in the shareholder base to long-term folks with a growth bias. Our target ... suggests investors will certainly need a growthier lens, yet it still doesn’t seem overly expensive for perhaps the world’s leading content company and one of two global streaming giants."

The Disney analyst also told investors that for the stock "short/medium-term catalysts are about the streaming ramp, and how parks performs once capacity begins to normalize in the second half of fiscal year 2021."