Walt Disney upgraded to Neutral at BTIG Research -- The Force is Strong Enough (For Now)
BTIG Research upgrades DIS to Neutral from Sell. After watching Disney's streaming strategy investor day last Thursday, firm remained skeptical and were planning to stick to their SELL rating. Offering a wider array of well-known library content at a lower than expected price excited investors and shifted the Disney narrative (for now) away from its secularly challenged media network portfolio, especially with Disney management willing to set an ambitious 60-90 million five-year subscriber target for Disney+. While it is nearly impossible to disprove a five-year projection for a service that has not even launched, Disney's subscriber targets appear overly aggressive relative to the planned level of original programming investment (only $2.5 billion by 2024), with many other unanswered questions from firm's Handbook. While Disney is admittedly not going as far as firm would like in their direct-to-consumer strategy (collapsing windows and proactively cannibalizing legacy businesses), Iger and Disney are clearly listening to much of what firm has written over the past few years and appear to realize an even more dramatic shift in Disney's strategy will be required as its legacy businesses erode. Firm suspects Iger and Disney do not believe their own break-even projections for DTC, but will move investors over time, as their faith in Disney's DTC strategy grows.