Shares of Walt Disney Co. haven’t been getting a lot love on Wall Street currently, however one new bull sees a shopping for alternative.
Raymond James’ Ric Prentiss initiated protection of Disney’s inventory
DIS,
with an outperform score and $97 goal worth Monday, cheering an “attractive entry point,” because the inventory nears its lowest valuation since 2019, based mostly on the corporate’s enterprise worth to adjusted earnings earlier than curiosity, taxes, depreciation and amortization.
Admittedly, the corporate faces “more questions than answers right now,” in response to Prentiss, who pointed to points like Disney’s anticipated buy of the one-third stake in Hulu presently owned by Comcast Corp.
CMCSA,
a possible sale of linear-TV property, management uncertainty and the way forward for ESPN.
“And with added issues like the cyclical advertising downturn, broader macroeconomic fears, and disappointing recent box office results, we think the near-term outlook and trading could be choppy, but remain positive on the long-term return prospects,” Prentiss wrote.
See additionally: Disney faces mounting challenges, however its Hulu ‘overhang’ may resolve earlier than anticipated
Read: ESPN’s ‘melting iceberg’ is one more problem for Disney, analyst says
His bullish initiation comes as Disney shares have dropped 21% over the previous 12 months and as they’ve lagged the S&P meaningfully over a multiyear span.
Prentiss mentioned he’s upbeat about Disney, partially due to what he calls “the strongest portfolio of intellectual property” throughout the media sector. “We believe IP is very important in driving returns on content investments, as it gives audiences an immediate connection to the content and a reason to watch, which we think reduces the risk of investment,” he wrote.
He additionally mentioned he likes the cushion that Disney’s parks, experiences and merchandise section present.
“A stable (excluding recent impacts from COVID), cash-producing asset is all the more important given the uncertainty around Disney’s other businesses and the entire industry’s costly transition from linear to streaming,” Prentiss mentioned.
More from MarketWatch: Disney could also be close to a ‘turning point’ — for higher or worse
He additionally started protection of a pair of different media names, slapping a market-perform score on shares of Paramount Global
PARA,
and taking an outperform stance on shares of Warner Bros Discovery Inc.
WBD,
Those names have additionally been laggards in recent times.
“As TV viewership and revenue shift from linear to streaming, Paramount remains heavily exposed to Linear TV (54% of revenue from advertising and affiliate fees, plus 13% from TV licensing/other) compared to large media peers like Disney at 28% and WBD closer at 44%, and the decline of linear should continue to be a headwind,” Prentiss wrote.
As for Warner, he cheered “significant synergies” for the corporate, which was fashioned by the merger of WarnerMedia and Discovery. The mixture “created additional scale through the Max integration, and we think should drive better subscriber acquisition, lower churn, and stronger pricing power,” he wrote.
Source web site: www.marketwatch.com
