Morgan Stanley Sees Disney Suffer From Confidence Crisis; Cuts Price Target by 12%

By Benzinga
December 14, 2021 Updated: December 14, 2021

Two analysts lowered price targets on The Walt Disney Co. but maintained the rating.

Morgan Stanley analyst Benjamin Swinburne lowered the price target to $185 from $210 (23 percent upside) and kept an Overweight.

Swinburne raised his expectations for streaming investment levels and reduced the earnings outlook at linear networks as costs return and at the studio as theaters remain under pandemic attendance pressure.

Swinburne has lowered his adjusted operating income forecast by roughly 10 percent – 15 percent and is now forecasting $6–$7 of FY24 EPS and expecting minimal free cash flow in FY22 given a ramp in content production and higher parks capex.

However, he thinks Disney shares “suffer from a crisis of confidence” and have overreacted, leaving him seeing over 20 percent upside in shares from here, adds Swinburne.

He forecasts Disney Plus adds roughly 25 million “core” subscribers in FY22, up from approximately 21 million in FY21.

Macquarie analyst Tim Nollen lowered the price target to $185 from $195 and kept an Outperform, telling investors that he is more cautious on network media as the “streaming wars go global.”

Looking ahead to 2022, he favors ad agencies over media networks, arguing that the ad market is strong and agency stocks tend to perform well in early rate tightening cycles.

By Anusuya Lahiri 

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