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Disney Shares Rally, but JPMorgan Reluctant to Recommend Chasing

Sam Boughedda
Sam Boughedda trader
Updated 22 Nov 2022

Disney (NYSE: DIS) shares jumped more than 6% on Monday, with many analysts providing positive commentary on the stock following news regarding its CEO, but JPMorgan said they are ‘reluctant to recommend chasing.’

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Disney’s rally was on the back of news Bob Iger, one of the most successful chief executives in its history, is returning to run the media empire once more.

Disney said its current CEO, Bob Chapek, who replaced Iger in 2020, is stepping down immediately.

Following the news, Morgan Stanley said Iger’s return “improves the risk/reward” due to the firm’s confidence that Bob Iger has the “experience and credibility to execute what can only be described as an operational turnaround.”

Citi said the decision to reappoint Iger was a “proactive step by Disney given the firm’s faltering stock price.” They added that “the Street likes Mr. Iger almost as much as we do. We view his return as an unalloyed positive for the shares.”

Meanwhile, Moffett Nathanson upgraded Disney shares to Outperform from Market Perform with a $120 price target, based on the return of Iger. The firm stated that they “applaud Disney’s Board for the courage to make this change.”

However, JPMorgan analyst Philip Cusick wasn’t as positive on the news, stating Disney does not have any public appearances planned in the fourth quarter, and any commentary from Iger before earnings “seems optimistic.”

The analyst, who maintained an Overweight rating on the stock, added in a research note to clients that he believes Disney’s current direct-to-consumer strategy will unlikely change dramatically, but Iger’s mandate for “renewed growth” may imply a mandate to accelerate buying-in Comcast’s stake in Hulu. In addition, Cusick believes Disney’s streaming price increases and advertising shifts will probably not be reversed.

Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.