Implied value of Walt Disney content is 'too low here,' says Morgan Stanley By Investing.com

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Implied value of Walt Disney content is 'too low here,' says Morgan Stanley

Published Jun 05, 2023 11:26

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Implied value of Walt Disney content is 'too low here,' says Morgan Stanley

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Morgan Stanley reiterated an Overweight rating on Walt Disney (NYSE:DIS) but cut its price target on the stock to $110 from $120 in a note to clients Monday.

MS analysts told investors that while the company is in the midst of restructuring its media operations and earnings optimization will take time, they see the implied value of its content as too low here.

"We continue to believe Disney's media businesses are under-valued and under-earning," they wrote. "At its current $200bn EV, we estimate Disney's media assets (DMED) are being valued at $60-70bn (assumes DPEP @ roughly 12x EV/EBITDA). The roughly 5-10% EBITDA margin we forecast for Disney's Media businesses this year reflects in our view an under-earning business."

The analysts also noted that ESPN DTC "may be coming sooner rather than later," and they presume a new NBA agreement is one of the major remaining gating items, while they also said, "full Hulu ownership is back in the fold at Disney."

Disney shares are down around 0.5% Monday.

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