Nov 15, 2021 (Baystreet.ca via COMTEX) -- Since May 2021, Disney /zigman2/quotes/203410047/composite DIS -2.13% stock trended in the $175 range, unable to break out. The stock fell sharply last week when the theme park giant posted Q4 results that missed analyst expectations.
Despite the disappointing results, the dip in shares is uncalled for.
Disney posted non-GAAP earnings a share of 37 cents. Revenue rose by 26% year on year to $18.53 billion. Importantly, Disney+ subscribers rose from 73.7M in 4Q20 to 118.1 million. It missed expectations because the theme parks are not yet benefiting from the opening up of international travel. People have lots of money to spend and will consider visiting Disney.
At below $160, DIS stock is at lows not seen through much of the year. Investors get a post-COVID travel stock and a growing streaming service through Disney+. At a forward price-to-earnings of 32 times, the stock is far cheaper than other streaming services stocks like Roku /zigman2/quotes/205087179/composite ROKU -2.94% or Netflix /zigman2/quotes/202353025/composite NFLX -1.83% .
Investors could expect Disney to trade to at least $200 in the next 12 months. The markets over-reacted and dumped a quality stock.
Disney needs to invest more in content to attract subscriptions and increase recurring revenue. This will hurt cash flow. As its theme parks re-open, it may re-invest the cash proceeds to its streaming service.
Watch for Disney's content to attract viewers. Shows like "The Mandalorian" are examples of original material that customers want.
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