Some strategists say that shares of Disney could observe a boost on the heels regarding the reported deal between Twenty-First Century Fox and the company as well as the release of the latest “Star Wars” film.
The senior portfolio manager at Gradient Investments, Mike Binger, said that the deal between the said companies — which sources informed CNBC would value Fox assets to be at $60 billion — is attractive.
Disney has been underperforming in the market over the past two years, said Binger, and a move that is like this “could be the shot in the arm the stock needs.” The shares of the company are up by 3 percent in 2017 as the S&P 500 index has increased 19 percent.
On Tuesday, Binger wrote to CNBC: “The combination of their studio libraries really boosts Disney’s entertainment content. Especially as Disney is readying to unleash their new streaming video and on-demand services.” He added that the said deal would add global cable networks and it would help diversify away from the ESPN brand, which has struggled recently.
Binger added: “Investors like scale as traditional media companies compete against heightened competition. This is a blue chip company trading at a discount to the market. And don’t forget, Star Wars is coming, and Coco is topping the box office recently.”
From a technical point of view, Disney has “a lot of potential,” stated the equity strategist at Miller Tabak, Matt Maley.
On Tuesday, Maley wrote to CNBC: “Disney has broken above its trend line from April … so if it can follow this up with a break above the 110.50 level (its highs from July & earlier this month), it’s going to be quite positive for the stock.”