Disney shares could rally up to 45% in 2023: Wells Fargo

on Dec 20, 2022
  • Steve Cahall expects the Walt Disney Co to spin-off ESPN by late 2023.
  • He expects such a move to see Disney shares trading at $125 next year.
  • Shares of the entertainment conglomerate are currently down 45% YTD.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

Walt Disney Co (NYSE: DIS) is trading slightly up on Tuesday after a Wells Fargo analyst issued a bullish note in favour of the entertainment and media conglomerate.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

Disney shares could rally on an ESPN spin-off

Copy link to section

Steve Cahall recommends buying Disney shares at current levels and sees upside in the stock to $125 – about a 45% price increase from here.

He’s bullish because he’s convinced that the Walt Disney Co will spin-off ESPN and ABC by late 2023.

Disney is a franchise IP company with a monetisation flywheel. Sports is a distribution business where value accrues to leagues. There’s very little reason for Disney and ESPN to remain together given evolution of media consumption.

Earlier this year, activist investor Dan Loeb had also pushed for Disney to spin-off ESPN, arguing the latter will have more flexibility to expand in the likes of sports betting if it weren’t a part of Disney.

Cahall is betting on the return of Bob Iger as CEO

Copy link to section

Now that Bob Iger is back at the helm, Cahall even expects the mass media company to consider selling its stake in Hulu to improve its balance sheet.

According to the Wells Fargo analyst, spinning off ESPN will see the remaining Disney trading at an enterprise value-to-EBITDA multiple of 16 times. His note reads:

Recall that Iger built Disney into what it is today: a franchise [intellectual property] leader with global scale. ESPN, traditionally the cash cow, is neither owned-IP nor global the way the rest of Disney is.

Another notable bull on Disney shares, as Invezz reported here, is Jim Cramer. For the year, this stock is down about 45% at writing.


Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals.

Learn more
Dan Loeb Disney USA Leisure & entertainment Media North America Stock Market World