Disney shares busted out of the starting gate, rising 8% in early trading on a wave of optimistic sentiment about Bob Iger’s return engagement as CEO.
The stock pushed near the $100 mark after rising in pre-market trading. It had slumped more than 40% in 2022 to date as financial results have weakened on the watch of ousted CEO Bob Chapek.
Wall Street analysts weighed the company’s new prospects under Iger, who ended a 15-year run as CEO in 2020 before being summoned out of retirement by the company’s board of directors in a Sunday night shocker. The 71-year-old exec will serve at least two years in the top job and identify a successor, the board said. Just five months ago, it had extended Chapek’s contract through 2025, making the Iger move all the more stunning.
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Michael Nathanson of MoffettNathanson sounded one of the most positive notes on the Street, upgrading Disney stock to “outperform” (buy) and upping his 12-month price target by $20 to $120. In a note to clients, he said Iger had built Disney into a “global powerhouse,” specifically with his brand-centric tentpole strategy and the acquisitions of Pixar, Marvel and Lucasfilm.
As a leader, Nathanson added, Iger’s “communications skills and his ability to stay focused and honestly optimistic in the face of structural challenges provided a constant ballast in the roughest of media waters. We believe investors will value the transparency and return Disney some of its long-lost magic with a
stronger narrative driving the stock higher again.”
Bank of America’s Jessica Reif Ehrlich was among many to take note of the oddity of the board ejecting Iger’s hand-picked successor, Chapek. Earlier this month, in the wake of Disney’s disappointing quarterly earnings report, Ehrlich took a glass-half-full view, noting Disney’s stable of powerful brands and also its revitalized theme parks. “We now expect Iger to fully re-evaluate several of the recent strategic initiatives and corporate restructurings over the past two years, which could create some near-term uncertainty on direction of the company,” she cautioned in a client note.
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