Is Disney stock a ‘buy’ after Nelson Peltz ditched the proxy fight?

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on Feb 9, 2023
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  • Disney announces plans of lowering costs by a whopping $5.50 billion.
  • Activist investor Nelson Peltz says the proxy fight with Disney is over.
  • Wells Fargo raised its price target on Disney stock to $141 on Thursday.

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Walt Disney Co (NYSE: DIS) is in the green today after reporting a market-beating quarter and making a series of announcements that cheered shareholders.

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Nelson Peltz says the proxy fight is over

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Last night, the entertainment conglomerate revealed plans of cutting 7,000 jobs worldwide. According to Disney, it’s committed to trimming costs by a whopping $5.50 billion as Invezz reported HERE.

Interestingly, the update ended up being sufficient for the billionaire activist investor Nelson Peltz to call it quits on his proxy fight with the media company. On CNBC’s “Squawk on the Street”, he said:

This was a great win for all shareholders. Management at Disney now plans to do everything that we wanted them to do. We wish the very best to Bob, we’ll be watching, we’ll be rooting, and the proxy fight is over.

For the year, Disney stock is now up roughly 25%.

Is Disney stock worth investing now?

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Also on Thursday, Wells Fargo analyst Steven Cahall raised his price objective on Disney stock to $141. That represents another 25% upside from here. His research note reads:

Bob Iger laid out a plan for cost cuts, content and streaming rationalisation and ultimately improved profitability. An execution story is a cleaner catalyst path, and the shares should track higher on confidence + estimates.

On the downside, Disney+ lost 2.4 million subscribers in Q1. Speaking this morning with CNBC, though, CEO Iger dubbed streaming “the future” and said making it profitable was right at the top of the list for him.

He’s also reorganising the company into three core businesses: Disney Entertainment, ESPN, and Parks, Experiences and Products.

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