Walt Disney (DIS -1.01%) has struggled in recent years as its pivot to streaming has been messier than investors hoped, and its legacy media business has declined in the meantime.
However, there are signs that the company could be headed to higher ground as it seems to be nearly done with the transition. It just forged a deal to merge Hulu+Live TV with FuboTV, giving it 70% ownership of the combined property, and it plans to bring its flagship ESPN network to streaming in the fall as well.
Its streaming division has also reached profitability, and subscriber gains should deliver margin expansion for the streaming business. Now, one Wall Street analyst is taking notice, calling the stock a buy on better times for the media business.
Image source: Disney.
Redburn Atlantic sees Disney going to $147
According to media reports, Redburn Atlantic analyst Hamilton Faber believes Disney has reached a point at which increases in streaming profit will more than offset the decline of its linear media business. That should free the company to deliver steady earnings growth as businesses like theme parks and consumer products remain strong.
The research firm upgraded the stock from neutral to buy and raised its price target from $100 to $147, representing an implied upside of 35% from its closing price on Jan. 10.
Is Disney a buy?
Despite the stock struggles, Disney still enjoys considerable brand advantages, and it benefits from a flywheel that connects and monetizes its intellectual property through video entertainment, theme parks, and consumer products, which all reinforce each other and create loyalty to the brand.
Disney is targeting a 10% operating margin at Hulu and Disney+ by the end of fiscal 2026 in nearly two years, showing it expects streaming margins to ramp up.
Disney won't get to $147 a share overnight, but the stock still looks like a buy for the long term, especially given the upcoming launch of the flagship ESPN streaming service.
