Disney hits record high on Avengers Endgame success

Walt Disney Co. shares hit record levels on Monday, after the company’s "Avengers: Endgame" film shattered box-office records.

The success of the film prompted analysts to expect a much larger contribution from the studio division to the company’s overall profit, and it is also seen as a positive sign as the Dow component prepares to launch its Disney+ streaming service. Beyond Disney, analysts also saw upside for theater companies.

Shares of Disney gained as much as 1.8 percent in the stock’s fifth straight daily gain, though it subsequently pared its initial bounce. AMC Entertainment jumped as much as 3.6 percent and IMAX climbed 4 percent.

Here’s what analysts are saying about the film’s success:

JPMorgan, Alexia Quadrani
There is “no endgame in sight for Disney’s success.”

Raises full-year earnings estimate “largely on better expected performance at the Studio segment.” Price target raised to $150 from $137; overweight rating.

“We continue to see upside to shares” even after recent gains.

Rosenblatt Securities, Mark Zgutowicz
“The global phenomenon of ‘Avengers: Endgame’ more broadly highlights the ever-increasing popularity of Marvel content, a cornerstone of the Disney+ offering.”

The film could make about $900 million more than Rosenblatt had expected. Such “outperformance vs our expectations would generate an incremental ~$0.15 of earnings increasing 3Q19 EPS by ~8 percent and FY2019 by ~2 percent.”

Buy rating, $150 price target.

Cowen, Douglas Creutz
Estimates that the film could add between 10 cents and 12 cents to this year’s earnings per share.

“More importantly ’Endgame’ will be on Disney+ when it launches and we think it will be one more big draw to get people to sign up.”

Outperform rating, price target raised to $154 from $131.

“It would be hard to argue that the underlying value of Disney’s content isn’t at least as high as [Netflix], and additionally this valuation framework doesn’t give Disney any credit for having a vastly deeper library.”

B. Riley FBR, Eric Wold
The box office “sets a new bar,” and “Endgame” made $66 million more than the firm had expected.

Among theater-related stocks, favors Cinemark Holdings “on the expectation of improving Latin America trends,” and IMAX given “improving results out of China and a blockbuster-fueled film slate in 2019/2020.”

MKM Partners, Eric Handler
While many moviegoers wanted to see the film as early as possible, suggesting the box office total could be front loaded, “it would be surprising if the film earned less than $800mn in North America and with repeat viewings a $1bn ultimate gross appears a reasonable goal.”

Notes particular upside potential for IMAX, as “Endgame” set “a new opening record for the company and surpassed the prior all-time high of $47.6mn set by ‘Star Wars: The Force Awakens’ by 92 percent.”