The Walt Disney Company (DIS) has been trading on the New York Stock Exchange since 1957. It is a leading media and entertainment stock, operating with a broad range of businesses.
Yet, despite a loyal and sizable investor and customer base, DIS stock has been under pressure over the past couple years.
The pandemic caused DIS stock a significant amount of strife. Pandemic-related restrictions led to the shuttering of many core assets. Disney’s parks, cruises, and hospitality businesses all saw revenues flatline in 2020, and into 2021.
However, the tides have begun turning, in a big way. This past quarter, Disney saw impressive profitability with its core parks business that surprised even the most bullish analysts.
I remain extremely bullish on DIS stock from a long-term perspective. (See Disney stock charts on TipRanks)
Continued Growth Impressive
Investors may have had reason to write off this last quarter as a transition quarter toward being profitable, and achieving 2019 performance levels. However, Disney’s core brand and product offering did not disappoint. The company saw a surge in traffic at its core parks that was unexpected, to say the least.
This top and bottom line surge propelled revenues to reach $17 billion this past quarter. That’s an impressive recovery, considering the 93% drop in revenue Disney saw in the third quarter of last year, compared to 2019.
Risks related to pandemic-induced breakouts at various theme parks, or in the company’s hospitality or cruise businesses, remain. The various variants we’re seeing now are more deadly, and spread more easily, than before.
However, there’s little doubting Disney’s commitment to keeping its patrons safe. This is a company that’s done everything right thus far, and many expect will continue to do so.
Rich Promises from Media and Entertainment Sector
It’s important to mention one of the key drivers of Disney’s outperformance of late from a stock price perspective. Investors have increasingly focused on this company’s streaming business as a key catalyst.
Disney’s launch of its Disney+ streaming service essentially at the onset of the pandemic couldn’t have been better-timed.
The company has done some amazing things with its streaming service thus far. In the matter of less than two years, Disney saw subscriber growth that took rival Netflix (NFLX) 10 years to generate. Given Disney’s loyal following and high-quality brand, perhaps that’s unsurprising.
However, this sort of growth has clearly surprised the Street.
Disney expects to expand its current base of 116 million subscribers to 300-350 million by 2024. The key catalysts for this growth will be international in nature, with Disney targeting Latin America next as a key market.
Disney+ has produced many blockbuster shows, especially those under the Marvel banner. Black Widow became the highest-grossing movie since the pandemic, bringing Disney+ $125 million. This success of Disney’s streaming platforms contributed $12.7 billion to the company’s total revenue, which grew 18% in the last quarter alone.
Disney’s theme parks are now open, cruises are sailing, and so is the company’s stock price. A division that incurred a huge loss in 2020 has now quadrupled its revenue in Q3 of this fiscal year. The Parks, Resorts and Products segment reported revenue of $4.3 billion.
Wall Street’s Take
As per the TipRanks’ analysts rating consensus, Walt Disney is a Strong Buy. Out of 20 analyst ratings, there are 17 Buy recommendations, and three Hold recommendations.
The average Disney price target is $217.26. Analyst price targets range from a high of $263 per share, to a low of $185 per share.
Bottom Line
Walt Disney has maintained its position at the top of all media stocks. Even if it is still on its path to recovery, there’s reason to believe that this company’s stock price has room to run.
While the market has been in risk-off mode of late, Disney remains one of the safest long-term core growth holdings out there.
Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article.
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