A hero riding in on a white horse to save the day is the stuff of Hollywood legend. For The Walt Disney Company (NYSE:DIS), life is imitating art.
Bob Iger’s return as CEO in late 2022 has breathed new life into the struggling giant. Under his leadership, Disney has regained its magic, stabilizing operating expenses, turning its streaming services profitable for the first time, and prioritizing quality programming.
Despite the good tidings, Disney’s stock has yet to follow suit, with shares down 19% over the past six months.
The combination of Iger’s success and the deflated price presents a compelling opportunity, argues one investor, known by the pseudonym Envision Research.
“The recent price correction, combined with its improving fundamentals, has brought DIS valuation to the most attractive levels in a decade… Bob Iger’s turnaround strategies have been highly effective and are already rekindling growth, judging by recent results released in FY Q3,” Envision opined.
Chief among these strategies is Iger’s emphasis on cost control, the pursuit of strategic partnerships, and “his uncanny ability to identify good content,” argues Envision.
The investor recognizes that Iger’s tenure, which will come to a close in 2026, could pose a danger to this progress. However, Envision is optimistic that Iger’s successor will continue with many of the practices that the CEO has implemented.
“I expect an orderly succession and many of Iger’s strategies to be institutionalized after the succession,” writes the investor, adding that “Iger and DIS took the succession plan very seriously.”
Envision also acknowledges other dangers felt by the rest of the entertainment industry, such as fluctuations in consumer spending, increased competition in the streaming wars, and labor disputes such as the recent writers’ strike.
In addition, Disney’s physical attractions and theme parks are exposed to larger risks such as pandemics, natural disasters, and the ever-looming threat of geopolitics.
However, these risks do not damper his enthusiasm.
“My overall conclusion is that the positives outweigh the negatives under current conditions,” sums up Envision, who rates Disney shares a Buy. (To watch Envision Research’s track record, click here)
Wall Street shares this optimism. In the past three months, 23 analysts have weighed in, resulting in 19 Buy ratings and 4 Holds, giving Disney a Strong Buy consensus rating. The 12-month average price target of $118.53 suggests a potential upside of 31%. (See DIS stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.