Disney jumps after Morgan Stanley boosts its outlook for Netflix competitor Disney Plus
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- Disney shares rose as much as 3% after Morgan Stanley published a report on Thursday increasing their price target to $160 from $135.
- Morgan Stanley also increased its forecast for Disney's streaming subscriber growth, predicting it will hit 130 million by 2024.
- Disney stock hit a record high of $142.35 a share in April following the release of 'Avengers: Endgame.'
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The firm now sees subscribers rising to more than 130 million by 2024. That figure includes Hulu, Disney Plus, and ESPN Plus members. Comparatively, Netflix had 139 million global subscribers as of 2018.
Morgan Stanley also increased its price target for Disney from $135 to $160. Disney shares hit an all-time high of $142.35 in April after the blockbuster release of 'Avengers: Endgame.'
"Disney is building content assets that enable it take advantage of the significant direct-to-consumer streaming opportunity ahead," Swinburne said.
In early June, Variety cited a PwC report that said Netflix could be approaching a peak in US subscribers.
Disney announced details about its upcoming streaming platform, Disney Plus, earlier this spring. Disney Plus is expected to launch on November 12 at a price of $6.99 a month, or $69.99 a year.
Several companies have jumped into the streaming and original content space in the last few years including Apple, Facebook, and Amazon. Apple will be rolling out its own streaming platform dubbed Apple TV+ in the fall of 2019 as well. The platform is expected to feature original TV shows and movies.
Morgan Stanley also bumped up its forecast for Disney's long-term earnings to $11 of adjusted earnings per share in 2024.
"Despite higher start-up costs, we see a faster ramp at Disney Plus and accelerated profitability supporting a premium multiple," Swinburne said.
Disney is up 27.39% this year.