J.P. Morgan said that after the company’s investor day the firm has, “strong conviction,” that Disney shares will outperform.
“Disney surprised on the upside at its investor meeting yesterday, providing more financial disclosure and revealing a more content rich streaming service than previously expected. In addition, management provided a target for Disney+ of 60m-90m subscribers by F2024, on the higher end of our expectations, which we believe were already above consensus. While profitability in the product is not expected until F2024 (which may prove conservative), overall we walked away from the meeting very encouraged about the outlook and its likely success. With a low price point of $6.99 per month and robust content with four quadrant appeal, we would expect a steep initial ramp in subscribers. Combining this rapid ramp with ongoing growth in the core underlying business and synergies from the Fox deal, we have strong conviction that shares of DIS are well positioned to outperform ahead. Following a period of restriction, we are moving to an Overweight rating and a December 2019 price target of $137 (Overweight rating and December 2018 price target of $125 prior to restriction) from a Not Rated designation.”