Disney (NYSE:DIS) has been one of the Dow Jones Industrial Average’s (DJIA) worst performers in recent years. Nonetheless, despite the setbacks, industry headwinds, and macro uncertainties ahead, Disney seems like a media play that could recover sooner rather than later as CEO Bob Iger comes to the rescue yet again.
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This time, there’s more pressure to get things right, with rising interest rates calling for greater operational efficiency and the attention of activist investors like Nelson Peltz. Though Peltz is content for now, he could be quick to push for change if Iger’s turnaround plan doesn’t deliver. With seemingly nothing but negativity baked into the stock, it’s hard not to be bullish.
The company has a lot of moving parts, but with that could come many levers to pull to turn the tides. Iger is by no means a perfect top boss. However, few folks know the ins and outs of Disney and the media industry better than Iger. Provided he doesn’t make a big splash on the acquisition front (which seems doubtful at these depths), I view the odds in favor of Disney and Iger as they look to better compete in the wild world of streaming.
Disney’s Taking Time to Recover, but Patience Could Be Rewarded
The media kingpin got hit with a headwind hurricane when the pandemic struck. Add overinvestment in Disney+ and a tussle at the helm into the equation, and it’s clear the firm cannot solely blame the macro economy for its pains.
Undoubtedly, I would have expected Disney to be much higher than $97 and change more than three years after the COVID-19 pandemic began. Though it’s taking Disney more time to find its footing after the past few years of wild swings, I do believe there are finally some things to be optimistic about.
Deutsche Bank (NYSE:DB) views Disney stock as “attractive” as we head into the second half of 2023, with expectations of 30% gains for the year ahead. Analysts at Deutsche Bank listed several timely catalysts that could help power such a rally. The most remarkable bullish driver they outlined, in my opinion, is the strong movie slate.
Indeed, Disney has a lot of big-ticket productions in the works. I guess you could say these are must-see films. In any case, the strong slate bodes well for the box office and the Disney+ platform that such hits will eventually settle onto.
As macro headwinds take a hit on our wallets, causing some to hit the “cancel” button on their monthly subscriptions, we’ll gain a glimpse of which services are the most recession resilient. The best value is likelier to be spared from a recession-driven wave of cancellations. With big-budget products steadily flowing from Disney+, I’d argue that Disney’s streaming service offers a value that’s tough to match.
However, whether it’s a better value than Netflix (NASDAQ:NFLX) remains to be seen. Nonetheless, I believe that with such a strong movie slate, Disney+ is a tougher subscription to cancel, especially for families with children.
Disney Stock May Be a Hedge Fund Favorite
TipRanks’ Hedge Fund Confidence Signal spells good things for Disney stock. Currently, the gauge reads “Very Positive,” meaning that hedge fund sentiment is on the high side based on recent transactions. With so many big-league money managers betting big on the fallen media behemoth, I do think investors should take notice.
Undoubtedly, the biggest name on the list of late has to be Nelson Peltz (ranked #2 out of 483 hedge fund managers tracked by TipRanks), a man who was active with his big stake early on. For now, the proxy battle is off the table, with the billionaire investor stating that he’s already made an impact.
Personally, I think Disney should be welcoming Peltz with open arms. Peltz stated that the company now “plans to do everything we wanted them to do.”
With a much-needed assist and vote of confidence from Peltz, I do think Disney can climb higher under its own footing under Iger.
Is DIS Stock a Buy, According to Analysts?
Turning to Wall Street, DIS stock comes in as a Strong Buy. Out of 21 analyst ratings, there are 18 Buys and three Holds. The average Disney price target is $129.17, implying an upside potential of 32.1%. Analyst price targets range from a low of $107.00 per share to a high of $141.00 per share.
The Bottom Line on DIS Stock
Disney stock has been a major laggard in recent years. Though many shareholders may be losing patience, it may not take long before Disney feels the magic return from prior cost-saving efforts and other catalysts. With prominent hedge funds supporting the company, I think it’s hard to ditch The House of Mouse while it’s down and out.
