Disney stock rating reiterated at Outperform by Bernstein on streaming potential

Investing.com - Bernstein SocGen Group has reiterated an Outperform rating on Walt Disney (NYSE:DIS) with a price target of $129.00, citing significant growth potential for Disney+ in international markets. This target aligns with InvestingPro’s Fair Value analysis, which suggests Disney is currently undervalued, while the company maintains a strong financial health score.

The firm notes that Disney+ penetration remains low internationally, typically below 20% in key developed markets and under 10% in some regions, representing a substantial growth opportunity if the company invests in market-specific content. With revenue growing at 5% and a remarkably low PEG ratio of 0.12, Disney shows strong potential for value creation. InvestingPro subscribers can access 8 additional key insights about Disney’s growth prospects.

Disney’s total content spending has decreased from approximately $30 billion in 2022 to an estimated $24 billion in 2025, with general entertainment spending (excluding sports rights) at around $14 billion, which Bernstein points out is "well below Netflix’s $18 billion for the year."

The research firm suggests Disney’s content dollars may not stretch as effectively as Netflix’s in the near term, emphasizing there is "no quick fix" and that content investments "must be deliberate and meaningful in scale over time."

Bernstein concludes that while reallocating budget to targeted opportunities may optimize near-term margins, this approach could result in slower subscriber growth, which the firm considers "a foundation for long-term performance."

In other recent news, The Walt Disney Company announced plans to acquire a 2% stake in Webtoon Entertainment. This strategic move is part of a broader partnership in which Disney and Webtoon will collaborate to create a new digital comics platform. The platform will consolidate over 35,000 comics from well-known franchises such as Marvel, Star Wars, Disney, Pixar, and 20th Century Studios. Webtoon Entertainment will build and operate this unified service, which will expand upon Marvel Unlimited, offering both archived and current comic book runs. In a separate development, Disney has agreed to pay $10 million to settle allegations by the Federal Trade Commission concerning the improper collection of children’s data on YouTube. The settlement addresses violations of the Children’s Online Privacy Protection Rule, as Disney allegedly failed to label some videos as "Made for Kids." These recent developments highlight Disney’s ongoing strategic initiatives and regulatory challenges.

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