Disney shares added some positive tone to the US market, surging more than +10% as investors welcomed its earnings beat after languishing at multi-year lows for more than a year. DIS beat earnings expectations, reporting EPS of $1.04 compared to expectations of 0.97, while investors welcomed its deals with Taylor Swift and Fortnite maker Epic Games – the company has invested ~$US1.5bn in the latter as they put it to “create a new universe”, sounds like bad news for many parents! We have owned Disney in the past, predicated on our view that they should be able to better leverage their vast pools of content, and that is now starting to play out, although it took a lot longer than we expected.
Unfortunately, we exited DIS back in July 2023 at lower levels in our International Equities Portfolio, taking an 8% loss at the time, but reporting season regularly throws up these sorts of surprises in both directions and as we often highlight, we are not afraid to buy back into a stock at higher levels if new information comes to light.
- We like the risk/reward towards DIS ~$US110 but short-term gains could be capped by its 2-year high ~$US120.
MM likes DIS around the $US111 area
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