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JP Morgan says buy Disney after record Avengers open: 'No Endgame in sight for Disney's success'

Key Points
  • J.P. Morgan increases its price target on Disney to $150 a share from $137.
  • "The underlying business continues to perform very well with several notable catalysts ahead that we believe may continue to drive outperformance," J.P. Morgan analyst Alexia Quadrani says.
  • Quadrani also raises the firm's estimates for Disney's third quarter earnings to $1.80 a share from $1.73, specifically citing "Avengers: Endgame."
Bob Iger attends the World Premiere of Walt Disney Studios Motion Pictures 'Avengers: Endgame' at Los Angeles Convention Center on April 22, 2019.
Jeff Kravitz | FilmMagic, Inc | Getty Images

Disney blockbuster "Avengers: Endgame" passed the $1 billion box office mark in the opening weekend, and J.P. Morgan sees the strength of the company's core studio business as indicative of a strong year ahead.

In a note titled "No Endgame in Sight for Disney's Success," J.P. Morgan increased its price target on the company to $150 a share from $137. The new target represents a 7% increase in the shares from Disney's Friday close. The stock, which has gained more than 27% this year, was up 1.5% ahead of Monday's opening bell.

"The underlying business continues to perform very well with several notable catalysts ahead that we believe may continue to drive outperformance," J.P. Morgan analyst Alexia Quadrani said in a note to investors on Monday. "These catalysts could include upside to the Studio segment as well as Marvel's reveal of a longer term slate expected by mid summer, upside to attendance at Parks following the largest expansion in the company's history, and better revenue growth at Media Networks."

Quadrani said J.P. Morgan was also raising its estimates for Disney's third-quarter earnings to $1.80 a share from $1.73 a shares, specifically citing "a better than anticipated performance of Avengers: Endgame."

"We continue to see upside to shares even after an impressive ~20% increase since the Investor Day on April 8 given notable catalysts ahead," Quadrani said.

Cowen, which also has an outperform rating on Disney's shares, said in a note on Monday that the company has "a very positive content catalyst path for the next year."

Disney closed at $139.92 a share on Friday.