For investors in Disney (DIS), most of the focus this past year has been on the company’s success in its newfound streaming business.
However, when diving into Disney, it’s important to look at the entirety of the picture of this media and entertainment conglomerate. This is a company with a world-class portfolio of IP that has found a way to monetize its brands to an extent that’s generally not seen with other companies of this size.
Indeed, long-term investors who have bought and held Disney for the long-term, on the basis of this factor alone, have done very well. Despite the headwinds the pandemic provided for the company’s theme parks, cruise lines, and hospitality businesses, sentiment is starting to shift in a big way.
Let’s take a look at how well Disney has navigated the pandemic, and what’s next for this mega-cap company in the future. (See Disney stock chart on TipRanks)
Disney+ is the Big Attraction Everyone Likes Right Now
Perhaps the most well-timed investment of all time was the company’s launch of Disney+ on March 24, 2020. You know, pretty much the same time the pandemic changed our lives for good.
As we all sat at home in quarantine or in our home offices with nothing better to do than to find some new content to watch, Disney happened to be there by our side. The company has poured billions into developing its proprietary content for its Disney+ platform. Some estimates are that Disney will spend as much as $14-$16 billion on global direct-to-consumer content by 2024.
That’s a lot of ammunition backing this streaming platform.
Indeed, it appears Disney is not messing around when it comes to the streaming war. This is a company that’s aggressively pursuing content growth at a very rapid clip. Given the cash flows provided by its other core businesses, Disney appears to have the deep pockets and management support to go deep on this play. It’s a company intent on outright domination in this space.
For long-term investors, that’s a very good thing.
Indeed, the company’s results thus far have been incredible, in terms of user growth. Disney was able to amass 100 million subscribers in only 16 months. This same feat took rival Netflix (NFLX) approximately ten years to accomplish.
If this trajectory is sustainable, and Disney can capitalize on its global brand value in emerging markets, particularly in Asia, the sky’s the limit for the company’s streaming growth and profitability over time.
That said, investors shouldn’t forget about Disney’s other core businesses right now.
What Analysts Are Saying About DIS Stock
According to TipRanks’ analyst rating consensus, DIS stock comes in as a Strong Buy. Out of 19 analyst ratings, there are 18 Buy recommendations and 3 Hold recommendations.
As for price targets, the average analyst Disney price target is $209.65. Analyst price targets range from a low of $163.00 per share to a high of $230.00 per share.
Lifting of Pandemic Protocols Couldn’t Be More Bullish for DIS Stock
As mentioned above, Disney is one of those stocks that took an absolute beating at the hands of the pandemic.
This is a stock that went from trading around $150 per share prior to the pandemic to nearly $80 per share at the trough of the March 2020 selloff. Indeed, this stock’s precipitous decline, which nearly halved the company’s value in a few months’ time, is a reminder of the importance of cash flows from Disney’s core businesses. Those core businesses rely on the in-person experience for their fan base.
Accordingly, DIS stock is one of those post-pandemic rebound plays which has gotten a lot of love of late. This stock actually broke the $200 mark this year, which was a new all-time high. Currently, investors can pick up shares of DIS stock at a 14.6% discount to its all-time high.
Whether this is a deal or not remains to be seen. However, Disney is a company with a lot to gain from the reopening story. Furthermore, investors appear to be correct in pricing in this enthusiasm into DIS stock right now.
Parks & Resorts has consistently provided the largest share of revenue and cash flows for Disney, barring the pandemic. Accordingly, investors betting on DIS stock right now are hopeful this cash cow will be getting milked vigorously for the remainder of the year. Indeed, the amount of pent-up demand for a trip to Disneyland is likely to drive higher-than-average volumes for some time. This demand boost is certainly being priced into DIS stock currently.
With Disneyland officially reopening at the beginning of May, investors will certainly be keeping a close eye on how the company’s performance changes in the coming quarters. As more pandemic-related restrictions are lifted globally, it’s a safe bet Disney could be an outperformer.
Couple this catalyst with the growth seen in Disney’s streaming segment, and investors have a real winner on their hands.
Disclosure: Chris MacDonald held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
