Walt Disney Co (NYSE: DIS) deserves credit for a successful introduction to its streaming video platform, but a combination of other factors prompted Bank of America to name the stock a top investment idea.
Bank of America's Jessica Reif Ehrlich added Disney's stock to the research firm's "US 1 list" with a price target lifted from $144 to $168.
Disney's new streaming platform Disney+ launch has yet to launch but the compelling offering could be a notable value driver of shareholder growth, Reif Ehrlich said in a research report. The platform is backed by high-quality content, an expanded library of original programming, a competitive pricing point and a go-to-market strategy that leverages all of Disney's assets across the world.
Other factors that prompted the research firm to turn more bullish on the stock include:
- Continued momentum and traction at other streaming platforms including Hulu and ESPN+.
- Multiple high-profile releases ahead, including "Avengers" on April 26, "Toy Story 4" in June and "The Lion King" in July.
- Parks, Experiences & Consumer Product trends remain favorable and backed by favorable trends ahead of Walt Disney World's 50th anniversary in fiscal 2022.
- Synergies from the acquisition of most of Fox's assets can generate $2 billion in cost savings by fiscal 2021.
- Once gross leverage returns to 1.5-2 times, the company could resume capital returns.
Shares of Disney were trading higher by 1.3 percent at $133.50 Tuesday morning.
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