Disney announced higher prices for its streaming services, and Wall Street is loving it.The entertainment company hiked prices for Disney+, Hulu, and ESPN by almost 30%.Here’s what Wall Street is saying about Disney’s price hikes and 3rd-quarter earnings results. Loading Something is loading.
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Streaming services just got more expensive after Disney announced price hikes for its Disney+, Hulu, and ESPN+ streaming services.
The entertainment giant said the monthly price for Disney+ without advertisements will jump 27% to $13.99 from $9.99. The price for Hulu without advertisements will jump 20% to $17.99 per month from its current price of $14.99 per month. And the price of ESPN+ will increase to $10.99 from $9.99.
The price hikes will go into effect in mid-October and the prices for its advertising-tier subscriptions will not change at $7.99 per month.
The price hikes come at a time when Disney’s linear TV business, which makes up the bulk of its media profits, continues to decline while it is still losing money on its streaming ambitions. Disney said in its third-quarter earnings report that its streaming division lost $512 million in the quarter, even though it added 800,000 new subscribers to Disney+.
But Wall Street is warming up to Disney’s earnings report and planned price hikes, with the stock jumping as much as 4% in Thursday’s trading session.
Here’s how Wall Street reacted to Disney’s earnings report and streaming price hikes.
Bank of America: “Solid quarter with new areas of optimism.””We are encouraged as Disney maintained its high single digit revenue/operating income outlook for FY2023, announced a price increase of 27% on Disney+ in October, expects Disney+ net [subscriber] adds to accelerate in [the] fourth quarter, is on track to exceed initial $5.5 billion cost saving targets, announced a strategic partnership with PENN to launch ESPN BET, which will pay ESPN $1.5 billion over a 10-year time frame, crackdown on password sharing in the coming year, and intends to reinstate dividends before [the end of] 2023,” Bank of America said in a Thursday note.
Bank of America rates Disney at “Buy” with a $135 price target, representing potential upside of 50% from current levels.
Goldman Sachs: “Early signs of progress against management’s lengthy to-do-list.”Disney is showing “progress towards achieving direct-to-consumer [streaming] profitability by driving average revenue per user growth through a combination of price increases and adoption of the Disney+ ad-supported tier… Disney is maintaining improved profitability in Parks as international markets show strong recovery and Disney prepares to launch new cruise ships over the next 3 years. Solid management of the balance sheet and improved cash flow… We believe this positions Disney to reinstate a modest dividend later this year and to fund the buy-in of Hulu next year,” Goldman Sachs said in a Thursday note.
Goldman Sachs rates Disney at “Buy” with a $128 price target, representing potential upside of 42% from current levels.
JPMorgan: “Turnaround efforts begin to bear fruit.””While we are cautious on the media landscape overall due to streaming losses, linear sub declines, 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. Recent price increases and a heightened focus on scaling DTC advertising, as well as increased discipline on content spend should help in this regard,” JPMorgan said in a Thursday note.
JPMorgan rates Disney at “Overweight” with a $125 price target, representing potential upside of 39% from current levels.