Advanced Television

Analyst: Iger raises Disney’s prospects

November 22, 2022

Analysts at MoffettNathanson (MN) are – perhaps justifiably – impressed by Disney’s rehiring of its former boss Bob Iger. His new contract might just be for two years, but the appointment significantly improves Disney’s prospects, according to the firm.

MN’s report upgrades the Walt Disney Co to ‘Outperform’, and while congratulating the Disney Board of Directors for the courage to make this dramatic change also gives the ‘mouse-house’ a share price target of $120 (from about $92). Disney’s shares rose 6.3 per cent on November 21st.

MN admits they have never hidden their affection for Iger and the job he did in building Disney into the global powerhouse it has become. They also admit: “We have not recommended the shares since May 2020 for multiple reasons, including concern that the former CEO Bob Chapek had become wedded to a streaming strategy that did not make sense given today’s reality.”

They praise Chapek for his work managing Disney’s Parks division through the pandemic but criticise him for appearing anchored to the streaming strategy laid out in the December 2020 Investor Day which had created, [they felt], unrealistically high subscriber targets without a grasp for the underlying return on investment.

MN states: “Over the many years, Mr. Iger’s decision-making and strategic positioning – which ignored the Street’s often incorrect short-term focus – would ultimately separate Disney from the media pack. In addition, his communications skills and his ability to stay focused and honestly optimistic in the face of structural challenges provided a constant ballast in the roughest of media waters. We believe investors will value the transparency and return Disney some of its long-lost magic with a stronger narrative driving the stock higher again.”

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