Walt Disney Co. shares were the biggest gainer among the Dow Jones Industrial Average's 30 components on Tuesday after being added to Goldman Sachs' conviction list. Goldman Sachs analysts led by Drew Borst reiterated their buy rating and $138 12-month price target. Borst's increased confidence in Disney is driven by the success of its studio division as "Beauty and the Beast" continues its strong run, pulling in $981.4 million worldwide to date. Borst said the film's success increases his confidence that 2018 earnings-per-share growth will accelerate to 13% from 6% in 2017. There's also promise in the 2018 film slate as the studio continues to drive growth in consumer products. Disney's sports network ESPN is seeing accelerated profit growth, Borst wrote in his note to clients, as subscriber declines improve and NBA costs normalize. The tone surrounding ESPN has shifted slightly has its channels have been included in new online live TV services, such as DirecTV Now, YouTube TV and Hulu, as well as an anticipated direct-to-consumer offering from ESPN. Borst also wrote that he expects Disney's theme parks to reach new records in 2017 and 2018 as the company scales its new Shanghai park and adds new attractions, such as Avatar Land, Toy Story Land and Star Wars Land, at other park locations. Disney shares have gained more than 17% in the trailing 12-month period, while the S&P 500 index is up 15% in the same time frame and the Dow has increased more than 17%.
Continue Reading Below
Copyright © 2017 MarketWatch, Inc.