Disney Analyst Boosts The Walt Disney Company Stock Price Target to $200 Based on Theme Park Projections
With a Wednesday report, Guggenheim Securities analyst Michael Morris has raised his stock price target on The Walt Disney Company by $15, bringing it to $200. Disney’s stock closed on Tuesday at $175.99.
This theme park forecast “reflects a slower revenue recovery than current consensus estimates in fiscal year 2021-2023 and stronger long-term economic potential in fiscal year 2024 and beyond,” Morris said.
In highlighting different elements of Disney’s business, Morris values Disney+ at $132 per share (which is consistent with Netflix), Disney’s linear media businesses at $28 per share, and theme parks and consumer products operations at $80 per share.
“Corporate expenses and the impact of inter-segment eliminations are applied to these parts to yield our $200 price target,” Morris explained. “Over the next two years, we expect [staff] and guest safety to be a primary segment objective and anticipate meaningful investment in related protocols and health measures. However, we also believe that the company has used a period of slower guest traffic to revisit all elements of cost infrastructure with a focus on efficiency and effective use of technology. Given that the segment was expanding margins … for several years prior to fiscal year 2020 driven by scale benefits, we believe our about 40 percent fiscal year 2025 segment target margin is not only achievable but may prove conservative.”
Morris expects Disney’s attendance to gradually increase through fiscal year 2022. “In the near term,” he said, “our Walt Disney World attendance tracker indicates overall improved demand in fiscal first-quarter 2021 compared to the fourth quarter, consistent with expanded capacity availability during the quarter. The data indicates incremental softness over the Christmas and New Year holidays, indicative of more limited out-of-town travel compared to historical periods.”
Specifically, Morris anticipates locals to be returning to the parks first. This limits pricing power and resort hotel occupancy. But in the long term, Morris “expects demand to drive total economics above fiscal year 2019 peak levels.”