Disney Stock Rises After Analyst Names It Top Entertainment Pick For 2025: Retail Upbeat
By Stocktwits Inc | First Published Dec 18, 2024, 11:51 PM ISTMorgan Stanley’s bullish thesis is predicated on Disney’s content assets, its best-in-class underlying IP, and the prospect of healthy revenue growth and margin expansion at U.S. parks.
Walt Disney Co. ($DIS) shares rallied on Wednesday after Morgan Stanley analyst Benjamin Swinburne named the company his top entertainment pick for 2025, replacing music streaming service Spotify Technology S.A. ($SPOT).
Swinburne said he expects another strong year of advertising growth in the U.S. in 2025, predicting 6% year-over-year (YoY) growth. Excluding the political and Olympic spending seen in 2024, the growth will likely be a steeper 8%, he said.
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Disney will see substantial streaming profits in 2025, he added.
Morgan Stanley looks ahead to another two years of box office growth as film supply normalizes to pre-pandemic levels.
The firm said Disney's Experiences scale remains a clear advantage. Delivering on Experiences operating income guidance of 6% to 8% growth in 2025 and high-single-digit growth in 2025 will likely drive further re-ratings, it added.
Swinburne noted that Disney guided to an acceleration in the U.S. Parks business through 2025, with additional benefits from cruise ships launching in 2025 and early 2026. He said the company’s guidance factors in downside risk to attendance from Comcast Corp. ($CMCSA)-owned NBC Universal’s Epic Universe in May 2025.
Disney’s unique brands and scale support a diversified portfolio of growth assets, the analyst added.
The brokerage’s bullish thesis is predicated on Disney building content assets that enable it to take advantage of the direct-to-consumer streaming opportunity, its best-in-class underlying IP that bodes well for long-term content monetization opportunities and the prospect of healthy revenue growth and margin expansion at U.S. parks.
Morgan Stanley has an ‘Overweight’ rating and a $120 price target for Disney shares, offering scope for merely 4% upside potential.
On Stocktwits, retail sentiment toward Disney stock improved to ‘bullish’ (58/100) from ‘extremely bearish’ a day ago, with message volume staying ‘high.’
A Stocktwits platform user predicted explosive growth going into 2025.
Another, however, said they are losing patience as the stock returns are anemic.
At last check, Disney stock was up 1.62% at $114.85 on about half as much of its average volume. The stock has gained over 23% for the year.
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