Disney gets a price target increase from Loop Capital as media giant gains full control of Hulu

Loop Capital raised its price target for Walt Disney to $130 from $125, maintaining a buy rating, after Disney finalized its Hulu acquisition from Comcast for an additional $438.7 million, significantly less than the potential $5 billion liability. Analyst Alan Gould noted the deal provides clarity, enabling Disney to fully integrate Hulu into Disney+ and the upcoming ESPN streaming service, valuing the Hulu SVOD service at approximately 3.3x revenue and under $500 per subscriber based on FY2025 estimates. The transaction, expected to close on or before July 24, led to a slight increase in Disney's premarket stock price.

Analysis

Loop Capital has revised its price target for Walt Disney (DIS) upwards to $130 from $125, maintaining a buy rating, subsequent to Disney finalizing its acquisition of Hulu from Comcast. Disney will pay an additional $438.7 million to Comcast, settling the appraisal process for Hulu's valuation, a sum significantly lower than a potential $5 billion liability; this payment finalizes the purchase of Comcast's 33% stake for which Disney had already paid $8.6 billion. This resolution removes a key uncertainty and allows Disney to fully integrate Hulu into its Disney+ platform and the upcoming ESPN streaming service. Analyst Alan Gould highlights that based on FY2025 estimates, this transaction values the Hulu SVOD service at approximately 3.3 times revenue and under $500 per subscriber. The deal, anticipated to close on or before July 24, has been positively received, with Disney shares trading higher in premarket and up nearly 4% year-to-date, further supported by a broadly bullish analyst consensus where 26 out of 33 covering analysts rate the stock a buy or strong buy.

Key Decisions for Investors

• The resolution of Hulu's acquisition cost at $438.7 million, substantially below prior potential liabilities, removes a significant financial overhang for Disney and should be viewed as a positive de-risking event.
• Investors should assess the enhanced growth prospects for Disney's direct-to-consumer segment, as full Hulu integration with Disney+ and the new ESPN streaming service is now unimpeded, potentially unlocking considerable synergies and subscriber expansion.
• Monitor Disney's execution on integrating Hulu and the subsequent performance of its DTC offerings, particularly subscriber metrics and profitability, to validate the positive analyst outlook and the implied 12% upside to the new $130 price target.