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Pro Analysis

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
Disney Store at Miami International Mall in Miami, Florida.

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."