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Walt Disney (NYSE:DIS) announced yesterday that Bob Iger is coming back to replace Bob Chapek as the CEO. As a result, shares of the entertainment giant are trading about 10% higher in pre-market Monday.
Iger will stay for two years and has been tasked by the Board to “set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term.”
Analysts reflected very positively on the announcement, given Iger’s previous success as Disney’s CEO for 15 years. In addition to positive comments, Disney stock also earned an upgrade to Outperform at MoffettNathanson as “magic is back.”
“We applaud Disney’s Board for the courage to make this change,” said MoffettNathanson analysts in an upgrade note.
“We have never hidden our affection for Mr. Iger and the job that he did in building Disney into the global powerhouse that it has become. We have not recommended the shares since May 2020 for multiple reasons, including concern that the former CEO Bob Chapek had become wedded to a streaming strategy that did not make sense given today’s reality.”
The analysts described Disney’s recent earnings report as “disastrous.” The new price target for Disney stock at MoffettNathanson is $120 per share, signaling an upside potential of about 30% relative to Friday’s closing price.
Nathanson expects Iger to review the company’s investment plans, especially at Disney+, and narrow the focus down to “areas of franchise strength and away from broader general entertainment content.”
Ultimately, the analysts believe Iger’s decision-making, strategic positioning, communication, skills, as well as focus, will help Disney to separate itself from the media pack.
