The global streaming industry is a bustling marketplace with contenders galore, but two monoliths tower above the rest: Netflix (NFLX) and Walt Disney (DIS).
Disney, with its storied history in entertainment spanning nearly a century, boasts a treasure trove of iconic brands like Pixar, Marvel, and Star Wars. On the other hand, Netflix has swiftly amassed a colossal library of original content, captivating audiences across the globe. In a year where the S&P 500 Index clocked a YTD gain of 7.1%, Netflix surged by 25%, and Disney wasn’t far behind, notching a 24% gain.
The Case For Disney Stock
Disney’s (DIS) stronghold in the entertainment realm extends far and wide, encompassing beloved franchises like Pixar, Marvel, and Star Wars. With Disney Experiences rounding out its portfolio through theme parks, resorts, and beyond, the House of Mouse has a unique advantage in content creation and merchandising. While activist investors stir discussions on board matters, Disney’s revenue stream has remained robust and stable over the years.
In the first quarter of fiscal 2024, Disney witnessed a noteworthy 49% uptick in diluted earnings per share (EPS) year-on-year, reaching $1.04 per share, while revenue held steady at $23.5 billion. Making waves in the streaming realm, Disney+ made its grand debut. Despite a minor decline in Core subscriptions, Disney anticipates a substantial net addition of subscribers moving forward. The company eyes profitability in its combined streaming endeavors by the end of fiscal 2024 with a targeted earnings growth of 20% to $4.60 for the year.
What Do Analysts Say About Disney Stock?
On the Wall Street front, DIS stock commands a “moderate buy” sentiment. Of the 24 analysts in the mix, 14 laud it with a “strong buy” tag, ushering in optimism for its future. While Disney stock currently holds steady around the average target price of $112.81, a bullish high target price of $136 hints at a potential 21.3% upswing from current levels.
The Case For Netflix Stock
Though Disney has long ruled the entertainment roost, Netflix (NFLX), a relative upstart founded in 1997, quickly carved out a significant niche in the streaming landscape. From its DVD-by-mail origins, Netflix swiftly pivoted to become a leading global player in streaming content.
With an extensive array of original content and lucrative licensing deals, Netflix boasts a staggering 260.28 million paid members globally as of 2023’s close. Despite subscription fee hikes and a crackdown on password sharing, the company saw revenue climb by 12.5% year-on-year to $8.8 billion. Earnings followed suit, leaping from $0.12 per share to $2.11 per share in the fourth quarter.
Netflix’s strategic focus on burgeoning markets, coupled with plans to bolster its advertising segment for sustained revenue growth, bodes well for its future trajectory. With management eyeing a mammoth $600 billion-plus realm in pay TV, films, games, and branded advertising, Netflix’s fraction of the pie barely scratches 5%, signaling vast room for expansion. Not to mention, a Nielsen survey crowned Netflix with the title of the most-watched original TV series for the lion’s share of 2023.
What is Wall Street’s View on Netflix Stock?
As for Netflix stock, the sentiment is overwhelmingly bullish on Wall Street, with a notable 22 analysts championing it as a “strong buy” and others echoing with favorable recommendations. Exceeding analysts’ average price target of $555.37, Netflix’s lofty high target price of $725 suggests a potential 19.1% growth trajectory in the upcoming year.
Which Streaming Stock is a Better Buy?
In the realm of entertainment investments, both Netflix and Disney stand tall, offering distinct value propositions. While Netflix dazzles with a rapid revenue ascent spurred by subscriber proliferation, Disney’s resilience amid competition shines through its diversified revenue streams.
At present, Wall Street’s endorsement of a “moderate buy” status stands for both Netflix and Disney stocks. In valuation terms, Netflix trades at a forward 2025 earnings multiple of 35x, overshadowing Disney’s more attractively priced 24x. Despite Disney’s wallet-friendly stature, the prognostication points to Netflix outpacing in growth over the coming biennium.
On the whole, my sentiment resonates with Disney’s broad revenue streams and iconic brand allure, cementing its status as the prime choice for investors in the current scheme of things.
