Analysts Are Cutting Price Targets of These 5 Stocks

02. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 95

The Walt Disney Company (NYSE:DIS) is a diversified entertainment company that operates various businesses within the industry. Notably, it offers popular streaming services, including Disney+ and Hulu. Both services require a subscription fee, starting at $8 per month. Hulu provides a wide range of television channels and features high-quality original programming at affordable prices. It appeals to a broad audience with its diverse content selection. On the other hand, Disney+ is designed with families in mind and offers a collection of nostalgic and original shows. It allows streaming content in Ultra HD (UHD) resolution for an enhanced viewing experience. On June 26, Loop Capital Markets analyst Alan Gould reiterated a Buy rating on The Walt Disney Company (NYSE:DIS) and established a price target of $110, lowering it from $120.

VGI Partners Global Investments Limited, an investment management company, mentioned The Walt Disney Company (NYSE:DIS) in its 2022 annual investor letter. Here’s what the firm said:

“The Walt Disney Company (NYSE:DIS) is a diversified media conglomerate operating media networks, theme parks, film and TV studios and direct-to-consumer streaming services. It is the global leader in theme parks with hotels and cruise lines aimed at families. Key assets within Disney are the instantly recognisable entertainment franchises that have multiple avenues of monetisation such as Mickey Mouse, Star Wars, ABC and Marvel’s Avengers.

Disney’s share price declined due to a number of factors in 2022, presenting us the chance to purchase a long-admired business and its unique collection of valuable intellectual property assets at what we consider to be a very attractive valuation. Summarily, the EPS of Disney has declined from US$7 in 2018 to ~US$2.60 in 2022 but we believe that the earnings power of the assets has not diminished to anywhere near this extent.

Disney is currently undergoing a business transition within the Media and Entertainment Distribution division (DMED) from traditional media property distribution via third parties (i.e. cinemas and broadcast networks) to a Direct-To-Consumer (DTC) model via the Disney+ streaming service. A key element of our thesis is that the earnings power of the company is currently being masked by the marketing and content investments within Disney+ and that this will normalise over the next several years. To put this in perspective, Disney+ (DTC sub-segment) currently generates operating losses of over US$3.3bn (a negative 14% operating margin) compared to operating margins at its nearest streaming competitor, Netflix, of +15.5%…” (Click here to read the full text)