By Sam Boughedda
The price target for Walt Disney (NYSE:DIS) shares was raised to $135 from $130 at Deutsche Bank by analysts on Tuesday. The analysts told investors in a note that the firm sees an attractive set-up for the second half of 2023.
"We believe that now is an opportune time to revisit Disney," wrote the analysts, who maintained a Buy rating on the stock. The firm believes a number of factors are "setting up the stock for appreciation in the back half of Disney's fiscal year (ending Sept.)."
The firm sees "F3Q as the inflection point for earnings growth, driven by yr/yr margin improvement in DMED (aka Entertainment) and continued strong revenue growth and margin expansion in DPEP (aka Parks & Consumer Products)."
"We expect cost reduction initiatives to really start to kick in during the June and Sept quarters, driving loss improvement in Streaming and smaller yr/yr OI declines in Linear Networks. While F2022 was the peak year for Streaming losses (according to management and our model), we expect F2023 to be the trough for DMED profit, as we estimate Linear Networks OI will decline by more than Streaming OI loss improves," the analysts added.
Furthermore, Deutsche Bank feels investors will increasingly become confident in Disney management's ability to successfully generate net OI growth in DMED going forward, while they also see upside to consensus estimates for total segment OI for F2Q and F2023 from strength in DPEP.