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- Wells Fargo has added Walt Disney (DIS +0.5%) to its Signature Picks list, responding to a pullback of 22% from its 2021 high.
- The bank is noting three points in its thesis for adding Disney on valuation weakness: First, the end of 2021 has shown that the company is facing "serious content obstacles" as it pursues its 2024 subscriber goals.
- "Therefore, the backdrop for DIS in 2022 is a proper execution story," analyst Steve Cahall notes. Disney's topping all rivals with $33 billion in content spending this year, so "the debate is around whether that content has the quality and focus to drive new subscribers to Disney+."
- Disney has a history of delivering the goods on content, though, so it's an attractive setup, he says, adding there's also confidence in a (more gradual) rejuvenation at the Parks division.
- Also, "We strongly believe investors will pay ~$200 for DIS when it is on track," he notes. The bank has a price target of $196, implying 24% upside.
- Disney's feeling some streaming strength today after a strong debut reported for its new Star Wars series, The Book of Boba Fett.