Streaming profits for the first time offset the decline in pay television. Redburn upgrades Walt Disney Company (DIS.US) to a buy.

Redburn Atlantic analyst Hamilton Faber has upgraded his rating on Walt Disney Company (DIS.US) from Neutral to Buy, and has raised its stock price target to $147, the highest among analysts tracked by Bloomberg. The analyst stated that Walt Disney Company has reached a tipping point, with the strong performance of its streaming service offsetting the struggling profits from its traditional TV service. In a report, Faber wrote that the significant cost cuts have led to the first growth in profits for Walt Disney Company's streaming service in the 2024 fiscal year, offsetting the decline in profits from traditional pay-TV. He added that the company is expected to achieve similar performance in the 2025 fiscal year. Faber said, "This is a pivotal moment, marking the end of the structural resistance obstructing the rise in Walt Disney Company's stock price." Walt Disney Company CFO Johnston had previously stated in an earnings call that the growth of streaming can "naturally hedge" the decline in traditional pay-TV business. This is a significant shift for Walt Disney Company, as its stock performance has lagged behind the S&P 500 index for the past 10 years, with more customers choosing online streaming services like Netflix (NFLX.US) and Amazon.com, Inc.'s Prime Video. Walt Disney Company's stock price initially rose 2.4% on Tuesday, but later gave back most of its gains, closing up 0.31%, while the S&P 500 index dropped over 1%. As of writing, the stock was up 0.06% after hours. According to Bloomberg's compiled analyst data, Walt Disney Company currently has 32 analysts with Buy ratings, 11 with Neutral ratings, and only one analyst recommending Sell. Faber's confidence in Walt Disney Company was also boosted by the three-year profit forecast released by management in November last year, which is rare for a company that historically does not make long-term profit forecasts. Faber said, "With a more solid foundation for content performance and the revival of streaming, the decision by management to release three-year guidance seems justified." Walt Disney Company is set to announce its first-quarter earnings on February 5th.