Disney to rally 21% this year as over-the-top deals offset subscriber losses, RBC says

Disney Store at Miami International Mall in Miami, Florida.
Alexander Tamargo | Getty Images for Allied

Investors should buy Disney shares because the media company will benefit from new distribution deals with cable companies and inclusion in new over-the-top services in the coming year, according to RBC Capital Markets.

RBC upgraded the media company to a outperform from sector perform.

"We're upgrading Disney as we see a turning point in investor sentiment around distribution revenue," analyst Steven Cahall wrote in a note to clients Thursday. "DIS will enter a new round of affiliate deals late in FY17 [fiscal year 2017]. As new deals are done affiliate revenue growth will accelerate, providing the necessary optics for generalists and making it difficult for shorts to press."