In the ever-expanding global streaming arena, two behemoths engage in a relentless tug-of-war: Netflix (NFLX) and Walt Disney (DIS). Disney’s illustrious lineage traces back nearly a century, boasting a treasure trove of timeless classics and blockbuster franchises like Marvel and Star Wars. On the other hand, Netflix’s meteoric rise stems from a colossal library of original content, garnering a fiercely loyal global following.
Amidst the frenzied competition, both companies have etched their names in the annals of the streaming industry. The pressing question now lingers – which stock holds the key to sustained growth and resilience in the long run?
Deciphering Disney Stock’s Merits
Disney’s (DIS) formidable arsenal includes cherished brands like Pixar, Marvel, and Star Wars, amplified by Disney Experiences spanning theme parks, resorts, and a myriad of consumer products. This diverse portfolio flaunts a proven track record of robust revenue streams over the decades, albeit amid skirmishes with activist investors mulling changes to the board amidst a prolonged share price underperformance.
Noteworthy are the figures from the first quarter of fiscal 2024 – a 49% surge in diluted earnings per share (EPS) to $1.04 and consistent revenue at $23.5 billion compared to the prior year.
Disney’s foray into the streaming realm with Disney+ saw a dip of 1.3 million core subscriptions sequentially in Q1 but anticipates a net addition of 5.5 million to 6 million subscribers in the following quarter.
Consolidating its various streaming ventures, Disney targets profitability by the fourth quarter of fiscal 2024, fueled by cost-cutting measures. Anticipated earnings growth of 20% to hit $4.60 in fiscal 2024 slightly underpins analysts’ consensus estimate of $4.65, with a predicted 3.3% uptick in revenue for the fiscal year.
Expert Opinions on Disney Stock
Wall Street’s sentiment toward DIS stock tilts as a “moderate buy.” Of the 24 analysts monitoring the stock, 14 flaunt a “strong buy” rating, with four backing a “moderate buy,” five standing at a “hold,” and a lone wolf at “strong sell.” Disney’s stock floats around its average target price of $112.81, while a high target of $136 whispers a potential 21.3% surge from current levels.
Crafting the Narrative on Netflix Stock
Emerging as a latecomer in the entertainment saga, Netflix (NFLX) found its footing in 1997, initially famed for its DVD-by-mail service before made waves in the streaming universe.
Sporting a colossal array of original content and strategic licensing pacts with major studios, Netflix embraced 260.28 million paid members worldwide by the close of 2023.
Despite subscription price hikes and the crackdown on password sharing, revenue surged 12.5% year-on-year to $8.8 billion, with earnings escalating from $0.12 per share to $2.11 per share in the fourth quarter.
Netflix’s thrust towards emerging markets, witnessing an uptick in streaming adoption, could catalyze future expansion. Plans to venture into an advertising arm to bolster long-term revenue and profits further underpin their growth strategy.
Management’s conviction in a $600 billion entertainment frontier marred by pay TV, film, games, and branded advertising, where Netflix asserts a mere 5% stake, portray vast opportunities for growth. Bolstering their position, they laud Nielsen surveys that heralded them with the “most watched original TV series for 48 out of 52 weeks in 2023.”
Prognosticating double-digit revenue growth in 2024, Netflix’s roadmap envisions a 14% spike in revenue and a remarkable 41.9% hike in earnings, as foretold by analysts.
Unveiling the Netflix Stock Outlook
Among the 40 analysts scrutinizing Netflix, 22 extol a “strong buy,” followed by a “moderate buy” trailblazer, 15 pitching a “hold,” and two outlier voices yelling “strong sell.”
Netflix’s upward trajectory shatters the analysts’ $555.37 average price target. The lofty target of $725 carries whispers of a potential 19.1% climb within the ensuing 12 months.
Choosing the Finest Streaming Stock
Both Netflix and Disney exude investment allure in the entertainment domain. While Netflix rides the wave of burgeoning revenue through expanding subscribers, Disney’s robustness against competitors emanates from its multifaceted revenue streams.
Labeled a “moderate buy” by Wall Street, Netflix trades at a forward 2025 earnings multiple of 35x in contrast to Disney’s 24x multiple. Although Disney’s stock appears a tad cheaper, analysts foresee Netflix sprinting ahead in growth trajectories over the forthcoming years.
In my humble opinion, the diversified revenue streams and iconic brands encapsulating Disney manifest a blend of stability and evolution, advocating it as the prime choice for investment today.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, view the Barchart Disclosure Policy here.
The views and opinions expressed herein represent those of the author and do not necessarily align with Nasdaq, Inc.
