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It’s time for investors to consider buying Disney after the media giant’s latest quarterly results , according to JPMorgan. Analyst Philip Cusick resumed coverage of Disney with an overweight rating, and a December 2023 price target of $135 that implies shares could advance more than 20% through year-end. “While we are cautious on the media landscape overall due to sustained streaming losses and advertising headwinds, Disney is our favorite name among the group due to the company’s strong asset mix and what we expect to be a rapid decline in streaming losses in the next year,” Cusick wrote in a note Monday. “CEO [Bob] Iger is focused on the path to profitability in DTC and we expect margins to improve as the company pares away what had become during COVID a bloated cost structure in DMED,” Cusick added. The resumption of coverage follows Disney’s better-than-expected fiscal first quarter results that showed significant growth in the firm’s theme parks, even as streaming subscriber adds came in short of the analyst’s expectations. The report also marked CEO Bob Iger’s first earnings since his return in November, who announced a $5.5 billion cost-cutting program to focus on profitability for the company. Additionally, he unveiled the reorganization of the company into three segments, the layoffs of thousands of workers, and pushed back against a sale of ESPN. Those moves were encouraging for the analyst, who said investors should “look to signs of improving [direct-to-consumer] profit over the year as a guide for shares.” “For F2023 we now model year-over-year total company revenue and segment operating income growth of 9.9% and 7.8% vs. F2022. We model the return of a $1/share dividend in F2024,” Cusick wrote. Disney shares have jumped 24% in 2023, after falling more than 43% in 2022 and roughly 14% in 2021. The stock was little changed in Monday premarket trading. — CNBC’s Michael Bloom contributed to this report.
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