“We’re Holding On to Our Linear Assets”: Disney Stock (NYSE:DIS) Jumps, Bucks Trend

Give entertainment giant Disney (DIS) credit: it absolutely has the strength of its convictions. A company that announced just days ago that “streaming is dead” is keeping its linear television operations in place, a move that is defying what increasingly seems to be de rigueur throughout the industry. And amazingly, shareholders are all in. In fact, they are so in that they sent Disney shares surging up over 3% in Tuesday afternoon’s trading.

We all know that Disney plowed a bundle into streaming, dropping over $650 million for only 24 episodes of Andor. But we also know that Disney has plenty of regular television presence as well, from the Disney Channel to Disney XD to, of course, ABC. And Bob Iger, Disney CEO, made it clear: the linear assets make Disney “more competitive.” Of course, it did not exactly help matters that Disney considered selling off ABC to Nexstar Media Group (NXST) two years ago, but Nexstar did not bite.

It also does not help matters much that Disney will “probably” stop reporting subscriber numbers on its streaming services. Iger noted that, soon, it will really only “…disclose…the bottom line.” Disney keeping linear, Iger suggested, would allow it to shore up its streaming operations as well, pulling cash from multiple directions to shore up the huge expenses streaming created.

The Unquiet Corpse of Dead Streaming

Meanwhile, for a studio that thinks streaming is dead, it sure gets plenty of mileage out of it. And buying up the rest of Hulu was a definite help, according to Alan Gould, analyst with Loop Capital. Gould has a four-star rating on TipRanks, and pitched the price target up from its previous $125 per share to a new $130. Gould also left the Buy rating in place.

Gould noted, “The outcome provides clarity and allows Disney to fully integrate Hulu into both Disney+ and the upcoming ESPN streaming service. Based on our FY2025 estimates ,the valuation implies approximately 3.3x revenue and just under $500 per subscriber for the Hulu SVOD service.” That does bring in a lot of new subscribers for comparatively cheap, and puts Disney on a more solid footing overall.

Is Disney Stock a Buy or Hold?

Turning to Wall Street, analysts have a Strong Buy consensus rating on DIS stock based on 15 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 14.66% rally in its share price over the past year, the average DIS price target of $124.53 per share implies 4.86% upside potential.

See more DIS analyst ratings

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