(Bloomberg) -- Walt Disney Co. has reached a point where its streaming service can outperform its struggling television offering, according to an analyst who has become the media giant’s biggest bull.
Redburn Atlantic analyst Hamilton Faber upgraded Disney to buy from neutral, and increased his price target on the stock to $147, the highest among analysts tracked by Bloomberg.
Fiscal year 2024 was the first time profit growth from streaming offset declines in traditional pay-television profits, thanks to aggressive cost cutting, Faber wrote in a note. He added that the company is poised to achieve the same feat organically in fiscal year 2025.
“This is an important moment, signaling the end of a structural headwind that has curtailed Disney’s share-price appreciation,” Faber said.
It’s a shift for Disney, whose stock performance had lagged that of the S&P 500 for a decade as more customers opted for online streaming services, including Netflix Inc. and Amazon.com Inc.’s Prime Video.
Disney shares rose as much as 2.4% on Tuesday before paring much of those gains. Still, shares closed about 0.3% higher while the S&P 500 Index shed more than 1%. Disney stock now has 32 buy-equivalent recommendations, 11 holds and just one sell, according to data compiled by Bloomberg.
Faber’s confidence in Disney was also boosted by the three-year forecast issued by management in November — a rare event for a company that has historically not made long-range profit projections. The company is set to report first-quarter results on February 5.
“With a renaissance in content performance and streaming on a more solid footing, management’s decision to issue three-year guidance looks well founded,” he said.
(Updates stock moves at market close.)
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