Walt Disney Co (NYSE:DIS) got a small but quick boost on Tuesday morning after Goldman Sachs analysts added Disney stock to the firm’s “Americas Conviction Buy” list.
Goldman already had a “buy” rating on DIS stock, which it reiterated in its analyst note, as well as its $138 price target that implies 23% upside from here. However, it gave Disney the additional nod thanks to the power of its film division, which should drive record earnings this year and next.
From analyst Drew Borst:
“Beauty and the Beast and a promising FY18 slate should drive record studio profits in FY17 and FY18. We expect FY18 to be DIS’ best film slate ever with 4 Marvel films, 2 Star Wars film, and 3 animated films. Like Beauty and the Beast, all of these films have large consumer product opportunities which could drive upside at the studio and consumer products.”
Specifically, Goldman is looking for earnings of $6.05 per share, which is higher than the consensus estimate of $5.95.
This past weekend, Beauty and the Beast brought in another $25 million in the box office — second to The Boss Baby — bringing its U.S. total to $432.3 million. Better still, Disney’s live-action remake of the animated tale is on pace to bring in $1 billion worldwide.
Disney stock, which suffered a seesaw 2016 that ultimately finished in breakeven returns, is recovering nicely this year, up more than 8% to double the S&P 500.
Technically speaking, Disney has been essentially riding its 20-day moving average since November, successfully testing it as support numerous times without approaching its intermediate-term 50-day MA, which sits about a percent or two lower.
Still, Disney’s stock price has been coiled up for almost a month and looks like it’s ready to break out — making it a bit surprising that today’s move hasn’t acted as a better catalyst to push DIS shares up and out.
Disney’s fiscal second-quarter earnings are due out Tuesday, May 9, after the bell.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
