Antipodes Vihari Ross has pitched entertainment conglomerate Disney at the Sohn Hearts & Mind conference in Queenstown, saying the stock has been priced for structural decline but has bright prospects ahead as it moves to streaming and pushes into cruises.
“This is a fundamentally compellingly valued business,” she said pointing out the stock is trading at 14.5 earnings, the same multiple as 10 years ago.
“What that negative headline narrative misses is the strength of the business under the surface,” she said.
Ross pitched that Disney was delivering 10 per cent earnings growth and when 5 per cent dividends and buybacks were added, its free cash flow was ratcheting up.
“We’re looking at up to 20 per cent per annum return opportunity in this business”.
“It has that real asset portfolio of parks and resorts, which actually drives the cash flow of the business. Streaming is rapidly replacing TV. It’s got that multipronged monetisation capability, and it has significant scale and cost advantages.”
“The the magical element of Disney, is something that Walt Disney himself sketched out in 1957, which is dream diversify and never miss an angle,” she said.
Disney shares fell 1.55 per cent overnight and is up 5 per cent so far this year.
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