Walt Disney (ticker: DIS) saw an early surge in its stock price on Thursday. While the increase in prices for its streaming services garnered attention, CEO Bob Iger's comments sparked speculation about the possibility of spinning off or selling some of Disney's assets.
Despite reporting mixed earnings for the July quarter, Disney stock rose by 1.7% in premarket trading, reaching $89.00. Over the last 12 months, however, shares experienced a decline of 26% until Wednesday's closing.
The primary question now revolves around whether Disney would be more valuable if the company were to be broken up. During the earnings call, CEO Bob Iger revealed that strategic options for its linear TV channels are being considered.
In the past, analysts had speculated about the separation of ESPN and ABC from Disney. However, Iger's confirmation of a full direct-to-consumer offering for ESPN makes an ESPN spinoff less likely. Nevertheless, the fate of ABC and other linear channels like FX and National Geographic remains uncertain.
Following the company's earnings report, CFRA analyst Kenneth Leon acknowledged Disney's significant value and suggested that strategic realignments and spinoffs could help unlock this value. Despite lowering the target price from $127 to $105, Leon maintained a Buy rating on Disney stock. He highlighted that the company is valued at 12.9 times its estimated fiscal 2024 earnings before interest, tax, depreciation, and amortization, surpassing the peer group average of 11.1 times.
In conclusion, Walt Disney is actively evaluating various strategic options for its assets, aiming to enhance its overall value through potential spinoffs and realignment. As the market closely observes these developments, analysts maintain a positive outlook for Disney's future.
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