Bob Iger To Bring 'Profit Accountability': 3 Disney Analysts Discuss CEO's Return

Zinger Key Points
  • "The return of Bob Iger could significantly boost investor sentiment," one analyst said.
  • Disney has said its direct-to-consumer products will be profitable by 2024.

Bob Iger is once again CEO of Walt Disney Co DIS after previously saying he would not be coming back.

The entertainment conglomerate saw its shares trade higher by 5.1% on Monday after the news was announced.

The decision marks a surprising change of direction for Disney, which just renewed former CEO Bob Chapek's contract in June.

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Chapek took over for Iger as CEO in February 2020, but Disney's shares are down 28.3% overall since Chapek became CEO. Iger has previously served 15 years in the CEO position and has spent more than four decades with Disney.
Under Chapek's leadership, Disney's Disney+ streaming service had delivered impressive growth numbers while subscriber numbers from Netflix, Inc. NFLX and other competitors plateaued. Unfortunately, Disney+ is not yet profitable in a market that has increasingly prioritized net income and valuation fundamentals.

Net losses in Disney's streaming division grew to $1.47 billion in the fiscal fourth quarter, more than double their losses from a year ago.

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Voices From The Street: Bank of America analyst Jessica Reif Ehrlich said Iger's first order of business will be to reassess several of Disney's recent strategic initiatives and corporate restructuring decisions, which will create near-term uncertainty for investors.

"We believe the return of Bob Iger could significantly boost investor sentiment and introduce a potential upcoming catalyst in the form of a new strategic direction," Reif Ehrlich said.

Rosenblatt Securities analyst Barton Crockett said content, not management, will ultimately decide where Disney's stock is headed in the long-term.

"If the return of Iger helps Disney improve its content game for the next couple of years, the stock — all else equal — will like it," Crockett said.

Needham analyst Laura Martin said Iger will create value for Disney investors in several ways, including moderating streaming losses.

"He will reestablish profit accountability, undermined when now ex-CEO Chapek separated content from distribution," Martin said.

Related Link: 5 Apple Analysts On Q4 Earnings Beat: 'Consumer Staple-Like Demand Characteristics'

Ratings And Price Targets:

  • Bank of America has a Buy rating and $115 target.
  • Rosenblatt Securities has a Buy rating and $120 target.
  • Needham has a Hold rating.

Photo by Tyler Nix on Unsplash

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Posted In: Analyst ColorNewsPrice TargetManagementTop StoriesAnalyst RatingsBank of AmericaBarton CrockettJessica Reif EhrlichLaura MartinNeedhamRosenblatt Securities
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