Bank Of America Is Still Buying Disney

• Shares of Walt Disney Co DIS have appreciated 14.21 percent year to date, while declining 10.41 percent over the past month.
• Jessica Reif Cohen of Bank of America Merrill Lynch has maintained a Buy rating on the company, with a price objective of $130.
• Cohen believes that the early success of Star Wars: The Force Awakens “bodes extremely well” for the company’s business model, given that it can further monetize Star Wars content.

According to the Bank of America report, “After much anticipation, Star Wars: The Force Awakens has opened strong in the U.S. and abroad, grossing $238mn in opening weekend domestic box office and an estimated $279mn at the international box office.”

In the U.S., this movie has seen the highest opening weekend in the history of December openings, as well as the highest opening weekend ever, the largest Thursday night preview, the largest Friday, opening day, the largest single day and the fastest to gross $100 million.

Internationally, the movie failed to break the opening weekend record set by Jurassic World, partly given that the movie will open in China only on January 9, 2016.

“While The Force’s initial results are highly encouraging for DIS’ FY16 estimates and the multi-year runway of the rejuvenated Star Wars franchise, opening weekend performance remains just a window into a wide range of ultimate outcomes,” the report mentioned.

Given the initial strength of The Force Awakens, the ultimate domestic box office could reach $700-$800 million.

“Importantly, direct competition appears light over the next few weeks, suggesting the film’s runway is clear. Repeat visitation is also a significant swing factor considering the franchise’s relatively passionate fan base,” the report added.