By Jeremy C. Owens, MarketWatch
Juenger described it as “a chance to replay the  playbook,” referencing Disney’s launch of Disney+ last year. “Announce a new [direct-to-consumer offering]. Hold an investor day. Announce 5-year sub, ARPU, and profitability target. Collect a ‘Netflix revenue multiple’ against that guidance priced into the stock,” he wrote, before adding a cautionary view of that approach.
“Before we get too carried away, hold on, this is not quite the same. Disney/Fox TV content is not consumer-distinguished in the same way as the Disney+ brands. There will be sizable required investments, we believe the biggest of which will be, once again, foregone licensing. Not to mention accelerated decline of int’l linear channels ($5bn write-off in the quarter).”
Read: Walt Disney World tightens face mask policy after guests took advantage of loophole
Not all analysts were swayed by Disney’s streaming plans. Needham analyst Laura Martin reiterated her hold rating and summarized the questionable numbers Disney released Tuesday.
“Disney provided no forward guidance. COVID-19-related costs in Disney’s FY3Q20 were $3B, net of cost savings, with Parks’ adverse impact alone at $3.5B. ... We remain on the sidelines until the structural economic impacts of COVID-19 on Disney are clearer,” she wrote.
Most other analysts, though, were happy to point toward new streaming initiatives as a potential savior for Disney.
“Disney management delivered a focused message of boldly pursuing additional global streaming video opportunities by leveraging STAR and Disney+ assets and a premium VOD window,” wrote Guggenheim analysts, who upgraded the stock to buy from neutral and increased the price target to $140 from $123.
“While it would be easy to maintain a cautious or skeptical approach to these initiatives, we expect the possible further expansion of streaming economics and core underlying investor confidence in Disney intellectual property make further share appreciation the more likely path from here.”
Disney Loses Nearly $5 Billion Amid Pandemic
Walt Disney Co. posted its first quarterly loss since 2001, as the coronavirus pandemic slammed its theme parks and film productions. WSJ’s R.T. Watson explains why investors still seem optimistic. Photo: Matt Stroshane/Getty Images