BofA analyst Jessica Reif Ehrlich reiterated a Buy rating on Walt Disney (NYSE:DIS) Thursday, lowering the firm’s price target on the stock to $122 from $140.
The analyst pointed to strong theme park demand as one of the reasons for their stance on the stock.
“Theme park attendance remains resilient despite recent macro volatility as visitors rarely cancel trips once booked. We believe Disney’s recent decision to cancel annual passes at Disneyland (lower per caps) is a positive indicator for booking trends and overall demand,” the analyst said. “The return of International visitors should help mitigate any potential softness in US consumer demand.”
Focusing on the IPL (cricket) streaming rights, Ehrlich said they believe investors are concerned with how it will impact Disney’s subscriber numbers near term.
“In our view, walking away from the Digital rights portion of the IPL package was prudent given: 1) elevated cost for these rights, 2) the lower ARPU of Indian based subscribers and 3) shifting investor focus toward profitability vs. subscribers.”
“We would not be surprised if this announcement forces DIS to re-evaluate its FY24 subscriber outlook of 230-260mn (30-40% were DIS+ Hotstar). We believe any potential guidance cut would be a negative one-day headline, but could also serve as an effective ‘reset’ and remove a key investor overhang.”
Disney shares have fallen over 1% Thursday.