Here's Why Morgan Stanley Continues To Believe In Walt Disney's Growth Potential

  • Morgan Stanley analyst Benjamin Swinburne reiterated an Overweight rating on the shares of Walt Disney Co DIS with a price target of $115.
  • The analyst continues to believe Disney can deliver significant earnings growth over the next several years.
  • The growth is expected to come through continued growth at its Parks & Experiences businesses (DPEP) and a return to growth for its Media & Entertainment businesses (DMED) in F24.
  • The analyst forecasts adjusted EPS growing at a 20%+ CAGR from F22 through F25.
  • Also Read: Disney Urges Shareholders To Veto Activist Investor Nelson Peltz's Board Seat Proposal At April 3 Annual Meet
  • In the analyst's view, the recent share appreciation reflects two recent shifts in sentiment. First, a less bearish view on Disney's cyclical revenue streams.
  • Second, strong results and share appreciation at streaming leader Netflix, Inc. NFLX (now at ~25x P/'24E EPS) has reminded investors that streaming can be nicely free cash flow generative at scale.
  • The path to the analyst's $150 bull case is primarily paved by a U.S. economy and U.S. consumer that avoid a recession and a faster-than-expected ramp in Disney's Media segment earnings (DMED).
  • In the analyst's recent report, the Last Dance, the analyst reflected the view on the opportunity to drive higher returns at DMED through expense rationalization, why there exists upside in shares from growth at DPEP despite the macro uncertainty, and a To-Do List for Disney's returning CEO Bob Iger and his executive team.
  • RelatedDisney CEO Bog Iger Faces Challenge As Nelson Peltz Plans Proxy Fight For Board Seat
  • Price Action: DIS shares are trading higher by 0.47% at $110.39 on the last check Tuesday.
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