Daiwa Starts Walt Disney (DIS) at Buy, Sees Disney+ as Global Streaming Market Leader

Daiwa Capital Markets analyst Jonathan Kees started the research coverage of the Walt Disney Co (NYSE: DIS) with a Buy rating and a $225.00 per share price target.

At the core of Kees’ bullish thesis on Disney is the belief that Disney+ can “expand and excel to the leadership position in the rapidly growing streaming market.”

“More specifically, we can envision a scenario where Disney+ overtakes and eventually overthrows the long-time streaming king Netflix in both total subscribers and market share. DIS has a wide moat with its distinctive brand and highly loyal customers, along with a deep line-up of existing and planned content. In addition, DIS has an established network of distributors, exclusive licensing rights, and moneymaking infrastructure,” Kees said in a client note.

Moreover, the analyst expects DIS to record faster-than-expected margin expansion as parks reopen. Disney should also witness increasing scale and efficiencies as Disney+ adds more subscribers.

“We believe that Street is missing the potential in streaming leadership, international expansion, targeted advertising abilities, exclusive sports content, and streamlined operations, as well as DIS becoming a technology company with its applications and new market entry. As such, we introduce rev and EPS forecasts that are above Street estimates with bigger deltas in FY22 and FY23. We point out that in F3Q21, despite DIS reporting better-than-expected numbers, especially for the parks segment (reaching profitability), parks’ attendance was still at limited capacity,” Kees added.

Finally, the analyst added that DIS stock is a hedge on both reopening and extended conditions on parks/streaming plays.

Shares of Disney are up about 1% in pre-open Tuesday.

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