Disney Shares Rise on Streaming Upgrade From Morgan Stanley Analyst
The analyst report aligns with Disney executives' own forecast in April of 60 million to 90 million subscribers by the end of 2024.
Disney shares were climbing 5 percent in midday trading Thursday on the heels of a bullish analyst report that predicts says the conglomerate can get 130 million households globally to sign up for its upcoming streaming products by 2024.
Disney earned $7.08 in adjusted earnings per share in fiscal 2018, and Morgan Stanley analyst Benjamin Swinburne figures that ESPN+, Hulu and Disney+, set to launch Nov. 12, can add $4 to annual per-share earnings in the next five years or so.
Swinburne boosted his price target on Disney shares from $135 previously to $160 on Thursday, suggesting the stock ought to rise about 13 percent in the next 12 months.
Disney+ alone should boast about 13 million subscribers by the end of fiscal 2020 and 70 million in 2024, Swinburne writes in a Thursday research note. The analyst report aligns with Disney executives' own forecast in April of 60 million to 90 million subscribers by the end of 2024.
"Encouragingly, consumers are voting with their wallets today, spending an estimated $15 billion-$20 billion a year for movies and TV products that will ultimately make its way to Disney+" he writes.
Swinburne argues that Disney+ won't require expensive marketing or the creation of a large volume of exclusive content. "We believe the market has often overstated the risk and under appreciated the reward of the transition to streaming," he writes.
Disney+ will actually grow quicker than has Netflix, which has 149 million subscribers worldwide, for two reasons, says Swinburne: The over-the-top market is more developed than it was a dozen years ago when Netflix began to heavily promote streaming, and Disney has very powerful brands.
Earlier this month, PricewaterhouseCoopers said that the overall U.S. streaming market will grow from $16.4 billion in 2019 to $23.7 billion in 2023. Globally, it will move from $45.3 billion to $72.8 billion in the same time frame.