Read Why Wells Fargo Names Disney As Favorite Large-Cap Growth Idea

Wells Fargo analyst Steven Cahall notes that the past few months have shown that The Walt Disney Co DIS will likely face some severe content obstacles to meet its FY24 subscriber guidance.

• Thus, the backdrop for Disney into 2022 is a "proper execution story," Cahall contends.
• Given Disney's history in delivering the content goods, Cahall thinks it's an attractive setup, naming it his "favorite large-cap growth idea for 2022."
• Disney said its content spend will increase by $8 billion in FY22 to $33 billion.
• Disney needs to average ~27 million net adds each year from FY22 to FY24 to reach its Disney+ guidance.
• Disney+ is currently worth ~$120 billion, ~$114 billion less than Netflix Inc NFLX. Disney managed to acquire subscribers quickly and attractively, with limited content spending.
• Wells Fargo sees the attendance recovering by F4Q22 and revenue per guest continuing to accel.
• Cahall has an Overweight rating with a price target of $196 on Disney, implying a 25% upside.
• Price Action: DIS shares traded higher by 1.05% at $158.40 in the premarket session on the last check Tuesday.