Disney higher as Raymond James starts coverage with bullish steaming outlook

Disney  (DIS) – Get Free Report shares edged higher in pre-market trading following a bullish coverage note from Raymond James as the media group looks to shed some of its legacy broadcast assets amid the streaming and sports-focused turnaround under CEO Bog Iger.

Raymond James analyst Ric Prentiss initiated coverage of Disney with an ‘outperform’ rating and a $97 price target on Monday, calling it the “premier” stock to play in the streaming transition. He also started with new coverage and similar ratings for media rivals Warner Bros. Discovery  (WBD) – Get Free Report and Paramount Global  (PARA) – Get Free Report, just days after media giant Byron Allen launched a bid to buy Disney’s ABC television network, as well as other linear cable assets, for around $10 billion.

Dallas-based Nexstar Media is also reportedly interested in the ABC network assets, following comments earlier this week from CEO Tom Carter at a Bank of America media conference.

Disney, which suggested over the summer that it could sell some of its traditional television assets as it looks to pare debt and focus on sports and streaming rights, said it was “open to considering strategic options for its linear business.” 

Iger, who returned as CEO at Disney late last year, is working through sweeping changes for the the media and entertainment giant, including a major cost-cutting drive and a new three-part organizational structure focused on Parks, Entertainment and ESPN.

“While [linear] remains highly profitable, the trends fueled by cord-cutting are unmistakable,” Iger told investors on a a conference call in July.

“Clearly, if we are to do anything significant in terms of strategic direction for our linear networks, we have to keep in mind [the flow of] content for our direct to consumer business, notably Hulu,” Iger added. “Anything that’s to be done would be with an eye toward our growth business, which is streaming.”

Disney shares were marked 0.4% higher in early Monday trading to indicate an opening bell price of $85.91 each. Paramount Global slipped 0.07% to $14.05 each while Warner Bros. Discovery was marked 1.5% higher at $12.02 each.

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