But the end of Walt Disney’s (ticker: DIS) third phase of Marvel movies could be just the beginning for the company’s stock, according to some analysts.
Read our cover story on Walt Disney : Working More Magic at Disney
Little did the writers know the forthcoming Marvel Cinematic Universe would grow to gross $20 billion world-wide in the decade since Disney acquired Marvel Entertainment for $4 billion in 2009.
Disney’s Marvel films have dominated rival DC Comics, led to massive toy sales, and created hours of online film and television content to differentiate its coming Disney+ streaming service from Netflix (NFLX) and Amazon.com (AMZN) Prime Video. In turn, the Marvel franchise has helped Disney stock reach new highs and win over a longtime bear.
What's new. Avengers: Endgame capped off the third phase of Disney’s Marvel film universe by grossing an estimated $1.2 billion world-wide in its first five days.
Rosenblatt analyst Mark Zgutowicz wrote in a note to clients that Endgame could be on track to become the highest-grossing film ever.
Zgutowicz estimates Endgame will earn $2 billion at the box office world-wide, but if it keeps a similar pace to Avengers: Infinity War, the new film could gross $2.9 billion. That $900 million difference would drive an incremental $350 million of operating income, or 15 cents per share.
Dougherty & Company analyst Steven Frankel noted the film’s IMAX version claimed $91.5 million at the global box office. That is 91% better than the previous opening record holder, Disney’s Star Wars: The Force Awakens and beating Frankel’s $70 million projection.
“At least for the next few weeks we can put aside the theory that streaming has killed the box office and millennials are too obsessed with their phones to go to the movies,” he wrote in a note to clients.
MKM Partners analyst Eric Handler added that Endgame helped flip domestic quarter-to-date box office revenues from being down 18% to a 3.5% increase. The debut “ has increased our confidence in our 3% growth outlook for the quarter,” he wrote in a note to clients.
Disney stock was down 1.4% at $137.91 midmorning Monday.
Looking ahead. It seems almost inevitable for Disney to dominate the entertainment industry for years to come.
“Importantly, the global phenomenon of Avengers: Endgame more broadly highlights the ever-increasing popularity of Marvel content, a cornerstone of the Disney+ offering,” Zgutowicz wrote in a note to clients. “Disney+ will be successful because its brands and content has established notably high levels of engagement.”
Zgutowicz has a Buy rating with a target price of $150.
As Jack Hough wrote in a Barron’s cover story late last year, Disney CEO Bob Iger has helped make the company “more Disney-like” in how it earns its money. Theme park expansions and blockbuster films have paved the way to the stock’s latest highs. And it might not stop there.