Disney shares ended Monday’s trading session 1% higher after a big turnaround sparked by a bullish report by a Bank of America analyst.
Jessica Reif Ehlrich reaffirmed her “buy” rating on Disney shares, writing in a note to clients that she titled “Revisiting the Happiest Place on Earth.” The COVID-19-addled media giant has “best-in-class assets with an attractive risk/reward profile,” Ehrlich wrote, boosting her price target by 26% to $146.
After sinking below $112 soon after markets opened Monday, Disney stock finished at $117.08 and continued to climb in after-hours trading.
Disney on Sunday delivered some welcome news for investors, announcing that its Hong Kong theme park will reopen Friday, with limits and restrictions. With Shanghai back up and running and the company’s U.S. parks in various stages of opening their gates to visitors again after three months of shutdowns, only the parks in Tokyo and Paris have yet to offer firm reopening plans.
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The theme park operation is one of “numerous catalysts” capable of driving growth at Disney, Ehrlich wrote. She noted the imminent returns of theatrical film releases and televised sports as well as synergy from the $71.3 billion Fox deal and direct-to-consumer streaming progress.
“With portions of the world economy now beginning to re-open — including Disney’s own theme park portfolio — we are increasingly constructive on the company‘s ability to restore its earnings power and drive value creation for shareholders,” Ehrlich wrote.
For investors, the potential return outweighs the risk by a factor of three, she added.
Not all analysts have been upbeat lately about Disney, which entered 2020 in peak form only to be ravaged by COVID-19, which directly hit nearly two-thirds of its revenue.
Michael Morris of Guggenheim didn’t single Disney out in an overall note Monday about media stocks. But he conspicuously excluded the company from his upside calculations around the return of live sports, despite the fact that ESPN and ABC telecasts of the NBA season wrap-up and playoffs will be center stage. “We expect the value of sports inventory on TV to continue to grow at a faster pace than the value of television inventory overall,” he wrote. “This supports our preference for Fox and ViacomCBS shares within our universe, which most significantly benefit from an increase in sports inventory value.”
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