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Why Disney's Shanghai Success Supports Theme Park Thesis For The House Of Mouse

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Why Disney's Shanghai Success Supports Theme Park Thesis For The House Of Mouse

What role will Walt Disney Co (NYSE: DIS)'s theme parks, particularly Shanghai Disney, contribute to Disney's stock?

According to UBS's Doug Mitchelson, Disney's Shanghai park will drive 29 percent of the EBIT growth for Disney's Parks division through 2021. As a whole, Disney's Parks segment will drive 67 percent of Disney's total EBIT growth over the same time period.

Shanghai Disney opened in June of 2016 but reports as soon as October suggested that the park is "no blockbuster." However, this isn't necessarily the same sentiment today, at least according to the analyst.

Mitchelson explained his positive outlook on Disney's Parks comes from two data sets which confirm healthy trends. First, Satellite Photogrammetry was used to measure parking lot utilization and Network Traffic Analysis was used to gauge park attraction wait times.

Both of these metrics signaled that attendance at Disney's Park in Shanghai "built steadily" through the fall and winter and into a "very strong" Chinese New Year.

Are Parks Being Ignored?

Mitchelson noted much of the attention among investors is focused on Disney's film slate. As such, investors may be underestimating Disney's Parks segment and the contributions it makes.

The analyst emphasized the fact that Disney is in the middle of an "aggressive" but also "attractive" investment cycle in its Parks segment. This will drive a 10 percent EBIT compounded annual growth rate within the segment "well into the next decade."

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Image Credit: By Fayhoo - Own work, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for DIS

DateFirmActionFromTo
Jun 2019DowngradesOutperformIn-Line
Jun 2019MaintainsOverweight
May 2019MaintainsBuy

View More Analyst Ratings for DIS
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