- Bank of America reiterated its Buy rating for Disney stock, and raised its price target from $115 to $135.
- Strategists pointed to Bob Iger's vision and reorganization of the company as reason for confidence.
- Management's earnings outlook also led BofA to raise its EPS estimate from $4.03 to $4.10.
Walt Disney stock has 18% upside thanks to Bob Iger's vision and strategy for the global media company, according to Bank of America.
In a Thursday note, strategists maintained their "Buy" rating for the company, and raised Disney's price objective from $115 to $135. Disney's first quarter earnings results exceeded BofA's revenue and operating income expectations, and Iger's vision and priorities were an encouraging sign.
Iger's return to the helm in November, replacing his successor Bob Chapek, has been cheered by investors. He announced Wednesday Disney would slash 7,000 jobs and reorganize the company into three units: Disney Entertainment, ESPN, and Parks, Experiences, and Products.
Disney stock surged after the earnings report, and has climbed about 4.5% Thursday. Year to date, it is up more than 31%
"While we are encouraged by Bob Iger's strategic vision for DIS, this is clearly the first phase in DIS' transformation, which will require adept execution," BofA said. "Bob Iger has a long, strong track record which provides confidence he will manage this transition for DIS."
The bank said downside risks include a potential, significant slowdown in ESPN's growth due to cord cutting, weaker consumer confidence and theme park attendance, and advertising weakness due to "softer audience delivery" or economic conditions.
As for Iger, his priorities for the year include improving company efficiency via $5.5 billion in cost cuts, giving control back to creative executives, and a greater focus on core brands and a potential pivot from general entertainment.
The Disney board wrote in a letter to shareholders earlier this week that it was "overseeing important strategic changes that our CEO Bob Iger is executing, such as putting more decision-making into the creative teams, implementing a cost reduction plan, prioritizing streaming profitability and improving the guest experience in our parks."