Wells Fargo analyst Steven Cahall notes that the past few months have shown that The Walt Disney Co (NYSE:DIS) will likely face some severe content obstacles to meet its FY24 subscriber guidance.
- Thus, the backdrop for Disney into 2022 is a "proper execution story," Cahall contends.
- Given Disney's history in delivering the content goods, Cahall thinks it's an attractive setup, naming it his "favorite large-cap growth idea for 2022."
- Disney said its content spend will increase by $8 billion in FY22 to $33 billion.
- Disney needs to average ~27 million net adds each year from FY22 to FY24 to reach its Disney+ guidance.
- Disney+ is currently worth ~$120 billion, ~$114 billion less than Netflix Inc (NASDAQ:NFLX). Disney managed to acquire subscribers quickly and attractively, with limited content spending.
- Wells Fargo sees the attendance recovering by F4Q22 and revenue per guest continuing to accel.
- Cahall has an Overweight rating with a price target of $196 on Disney, implying a 25% upside.
- Price Action: DIS shares traded higher by 1.05% at $158.40 in the premarket session on the last check Tuesday.
