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Credit Suisse Upgrades Disney, Sees String Of Catalysts Ahead

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Credit Suisse Upgrades Disney, Sees String Of Catalysts Ahead

Walt Disney Co (NYSE: DIS) shares have had a strong 2019, but the stock got a big upgrade on Thursday from an analyst that sees a string of bullish catalysts ahead.

The Analyst

Credit Suisse analyst Douglas Mitchelson upgraded Disney from Neutral to Outperform and raised his price target from $130 to $150.

The Thesis

Consensus fiscal 2020 EPS estimates for Disney have dropped from $8 to around $6 over the past year, but Mitchelson says expectations are now appropriately set and further downside to estimates is limited.

At the same time, Disney is approaching at least five major bullish catalysts:

  • Pay TV distribution renewals with Charter Communications Inc (NASDAQ: CHTR), DISH Network Corp (NASDAQ: DISH), AT&T Inc. (NYSE: T) and others.
  • Key “Star Wars” openings at Walt Disney World.
  • Disney+ streaming advertisements and partnership announcements likely starting in late August ahead of the Nov. 12 launch.
  • Early fiscal 2020 movie releases “Star Wars Episode IX” and “Frozen 2.”
  • A rebound in Fox results in fiscal 2020 that could restore confidence in Disney’s fiscal 2021 accretion projections.

Mitchelson said there are still risks to the Disney story, including the costs and success of Disney+. However, Credit Suisse values Disney’s streaming business alone at $31 billion, or roughly $17 per share.

“While Disney’s stock has posted modest outperformance relative to the S&P 500 this year, we see further upside to Disney shares to the extent its U.S. Disney+ launch is successful later this year, which continues to be our expectation,” Mitchelson wrote in the note.

Price Action

Disney shares traded higher by 1.7% to $137.10 at time of publication.

Related Links:

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Latest Ratings for DIS

DateFirmActionFromTo
Aug 2019UpgradesNeutralOutperform
Jun 2019DowngradesOutperformIn-Line
Jun 2019MaintainsOverweight

View More Analyst Ratings for DIS
View the Latest Analyst Ratings

Posted-In: Credit Suisse Douglas MitchelsonAnalyst Color Upgrades Price Target Top Stories Analyst Ratings Best of Benzinga

 

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