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JPMorgan & Guggenheim Share Different Views on Disney Stock

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Updated: 14 Jan 2022

Key points:

  • Disney opened Friday trading with a loss of 2.8%
  • JPMorgan maintain ‘overweight' rating and retain the company as its top media pick
  • In a different story, Guggenheim downgrade Disney to Neutral from Buy

Disney (NYSE: DIS) stock slipped 2.8% with Friday’s market open, extending a period of slow decline from March 2021. The famed media company needs no introduction or debate surrounding the success and growth of the company. Its long reign in the film industry was re-imagined with the addition of Disney+, a streaming service set to compete with the likes of Netflix and Amazon Prime Video; offering unique content in a bid to win subscribers. 

The platform initially was received incredibly well, with investors immediately taking to Disney stock after it went live at the end of March 2020 – whereafter stock continued to rise throughout the year; bolstered by increasing streaming numbers due to lockdowns; a factor that similarly aided Netflix and its other competitors. Earnings releases started strong, with a clear pattern of increasing subscribers; but lately, growth through the attraction of new subscribers has started to dwindle. 

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Today, analysts from JPMorgan and Guggenheim both released updates on the stock, but their outlook differed slightly. JPMorgan analyst Quandrani stands by Disney+, keeping the company as the firm’s top media pick. Quandrani expects subscriber growth to ramp up in the second half of 2022 and into FY23, looking past “near term noise” affecting legacy businesses in the face of Covid-19. The analyst refers to the companies outstanding intellectual property, stating the company is “yet to benefit from the flywheel of consumer interactions”.

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On a different side of the coin, Guggenheim analyst Michael Morris downgraded Disney stock to Neutral from Buy, based on the pace of profit growth within direct-to-consumer and Parks businesses. Morris refers to the company’s announcement that 2022 programming spending would increase by as much as $8B or 32%, stating it feels “underappreciated in a consensus outlook”.

 

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