January 28, 2023

Read Why Wells Fargo Names Disney As Favorite Large-Cap Growth Idea – Walt Disney Company (DIS)

Wells Fargo analyst Steven Cahall notes that the past few months have shown that The Walt Disney Co (NYSE:DIS) will likely face some severe content obstacles to meet its FY24 subscriber guidance.

  • Thus, the backdrop for Disney into 2022 is a “proper execution story,” Cahall contends.
  • Given Disney’s history in delivering the content goods, Cahall thinks it’s an attractive setup, naming it his “favorite large-cap growth idea for 2022.”
  • Disney said its content spend will increase by $8 billion in FY22 to $33 billion.
  • Disney needs to average ~27 million net adds each year from FY22 to FY24 to reach its Disney+ guidance.
  • Disney+ is currently worth ~$120 billion, ~$114 billion less than Netflix Inc (NASDAQ:NFLX). Disney managed to acquire subscribers quickly and attractively, with limited content spending.
  • Wells Fargo sees the attendance recovering by F4Q22 and revenue per guest continuing to accel.
  • Cahall has an Overweight rating with a price target of $196 on Disney, implying a 25% upside.
  • Price Action: DIS shares traded higher by 1.05% at $158.40 in the premarket session on the last check Tuesday.

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