Guggenheim Securities analyst Michael Morris sees the streaming service hitting 226 million subscribers worldwide and raises his price target on the stock by $8.
Guggenheim Securities analyst Michael Morris on Monday raised his subscriber forecast for Walt Disney streaming service Disney+ "to reflect the company's announcement of 50 million global Disney+ subscribers as of April 8."
He lowered his near-term financial estimates for Disney amid the coronavirus pandemic, but raised his 12-month stock price target from $100 to $108 "reflecting higher long-term estimates at Disney+."
Morris now projects that Disney+, whose original series include The Mandalorian, will reach 226 million global subscribers by the end of fiscal year 2024, up from his previous estimate of 135 million subscribers. The analyst boosted his domestic Disney+ subscriber forecast from 59 million to 74 million and his international user prediction from 76 million to 153 million.
"For comparison, we forecast that Netflix will have 292 million global paying subscribers by year-end 2024, up from 167 million at the end of 2019," Morris wrote.
Looking ahead at Disney's next quarterly earnings report, the first since the coronavirus pandemic, Morris wrote: "We expect investors to be particularly focused on Disney+ subscribers, average pricing and outlook. … Beyond Disney+, progress at Hulu (and to a lesser extent ESPN+), trends at media networks, including affiliate renewals and incremental ACC Network carriage, studio results driven by the releases of Star Wars: The Rise of Skywalker and Frozen 2, and parks trends will likely be in focus."
The Guggenheim analyst in his Monday report maintained his "buy" rating on Disney's stock, but highlighted: "We see parks and resorts trends as most likely to vary from consensus estimates as the significant likely impact from China parks closures has yet to be quantified."
His estimate is for the closures to "negatively impact segment operating income by about $750 million compared to $507 million reported at international parks and resorts in fiscal year 2019." Added the analyst: "Our assumption is that prolonged closures and a slow return of attendance at both Shanghai and Hong Kong for the balance of the year will result in revenue declines of 75 percent, 50 percent and 30 percent over the next three quarters."
