Disney (Ticker Symbol: DIS) is enjoying the great success of its new blockbuster hit Avengers: Endgame. The movie set records in its opening weekend grossing over $1 billion worldwide. Endgame has been forecasted to potentially earn over $3 billion dollars at the box office, making it the highest grossing film of all-time. The current record holder is James Cameron’s 2009 blockbuster, “Avatar,” which grossed upwards of $2.7 billion. Most films see an average of a 50%-70% decrease in ticket sales the second weekend and Endgame saw a decrease of around 60%.
Recent estimates have confirmed that Avengers: Endgame has passed Steven Spielberg’s “Jurassic Park,” The Russo Brothers’ “Avengers: Infinity War,” James Cameron’s “Titanic,” and J.J. Abrams’ “Star Wars: The Force Awakens,” to become the second highest grossing film of all time. Disney was more strategic with the release of Endgame than it has been with its previous blockbuster releases. Usually, movies are released domestically in the U.S. first before being released to other markets in Asia and Europe weeks or months after. Disney was able to release the film in 50 different countries, in the first five days, enabling it to shatter opening weekend box office records.
The smash hit movie is a whopping three hours long and movie theaters were adding additional showtimes early in the morning and late at night to meet demand. Some theaters opted to stay open for 24 hours to show the movie during its first two weekends. Additionally, if a theater had a contract to show a certain movie on one of its screens and was done screening for the day, that theater could screen an additional showing of Endgame, yet another way that the film was able to shatter box office records.
Over the past three years, Disney’s stock has been stuck in a trading range between the $96.00 and $120.00 price levels. The stock finally got a solid fundamental catalyst to break out above that range when the company announced a release date and lower than expected price for its streaming service Disney+. Disney’s stock gapped up higher on the announcement and proceeded to rally over 10%, trading to an all-time high of $142.37, which was also the Friday of the opening weekend of the much-anticipated movie Avengers: Endgame on April 26th. Despite the success of Avengers: Endgame, Disney stock has traded lower 7% since its release.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 17 analysts offering 12-month price targets, the average price target for Disney’s stock is $152.33. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $117.16.
Disney continues to impress its shareholders month after month in 2019. With the announcement of Disney+ and the roaring success of its box office blockbusters, Disney seems to be doing the right thing for its stockholders. Investors in Disney’s stock should look to the release of the live-action version of “Lion King,” on July 19th, which is also poised to set box office records, for future direction on Disney’s stock.