Springing a big surprise on Wall Street, Walt Disney (DIS) shares were pushing higher in Monday’s trading session after the company announced that ex-boss Bob Iger is back in the CEO seat.
Less than a year since he retired – Iger served as chairman until last December, after handing over the CEO reins to Bob Chapek in February 2020 – he has returned to take Chapek’s place and steady the ship following a difficult period in which the share price has taken the plunge and Disney+ keeps racking up the losses. Iger intends to stay in the role for two years, and in the interim the company will look for a successor.
Iger is highly regarded at Disney and was a driving force behind big acquisitions such as those of animation studio Pixar, Lucasfilm (home to Star Wars), Marvel comics and Rupert Murdoch’s 21st Century Fox. Additionally, he oversaw the launch of streaming service, Disney+.
In contrast, Chapek’s time in charge began at the pandemic’s onset, when Disney’s theme parks were shuttered due to the Covid-19 restrictions and his tenure has been turbulent. Lately, he has been the subject of growing criticism given the company’s lackluster performance. Disney’s latest quarterly earnings report, released earlier this month, was a bit of a dud, following which, the shares have been under further pressure.
Echoing initial market sentiment, Morgan Stanley analyst Benjamin Swinburne says Iger’s come back is good news for the stock, with the analyst believing his “return improves the risk/reward on DIS shares.”
“We have confidence that Bob Iger has the experience and credibility to execute what can only be described as an operational turnaround at Disney,” the analyst explained. “With shares near pandemic lows, we continue to believe our core Overweight (Buy) thesis is intact: shares are already reflecting macro pressure on the Parks business and not reflecting any significant value for Disney’s streaming business. Specifically, Disney’s content is under-earning and under-monetized. Bob Iger now has two years to sustain and enhance the company’s creative output, aggressively manage the cost base to reflect the reality of today’s Media environment, and execute a successful succession to a new CEO.”
All told, Swinburne rates DIS shares an Overweight (i.e. Buy) alongside a $125 price target. The analyst, therefore, expects the stock to climb by 28% over the coming months. (To watch Swinburne’s track record, click here)
On Wall Street, most analysts agree with Swinburne’s take; of the 20 reviews on file, 17 recommend to Buy while 3 say Hold, all leading to a Strong Buy consensus rating. (See Disney stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
