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Morgan Stanley: Disney's earnings will nearly double in 4 years

Key Points
  • Disney can nearly double its earnings by 2024, Morgan Stanley said in a note to clients on Tuesday.
  • The firm's equity analyst Benjamin Swinburne said Marvel's content plays "perhaps the most critical role" in building Disney+'s value for customers.
  • The stock has climbed nearly 30% so far this year, after the company announced its new streaming service, Disney+, which is set to launch in November.
Avengers Endgame
Source: Marvel Studios.

Disney will nearly double earnings by 2024 on the back of momentum from Marvel content feeding its new streaming service, predicts Morgan Stanley.

The firm said Disney can double earnings per share from $6.50 in 2020 to between $11 and $12 in 2024, as it builds its Disney+ streaming customer base.

"For all the complexities of Disney's business model transition and the stock's investment case, the durability of its content underpins everything," analyst Benjamin Swinburne said in a note to clients Tuesday. Additionally, Marvel plays "perhaps the most critical role" in building Disney+'s value for customers.

Disney's stock has climbed nearly 30% so far this year, after the company announced its new streaming service, Disney+, which is set to launch in November at the low price of $6.99 per month with no advertisements. Disney has also found major success this year in releasing several recording-breaking films. Disney's release of Marvel's "Avengers: Endgame," was named the highest-grossing film of all time.

Although Disney faces a large execution challenge for its streaming service, the media giant's brands and content give it a promising chance of success, said Swinburne. Disney is banking on getting 60 million to 90 million Disney+ subscribers by 2024 and Swinburne said because "Marvel has broken beyond fanboy demand to mass market" these goals are realistic.

Announced this weekend at Comic-Con, Disney plans to include Marvel movie spin-offs on Disney+ that will "help lock in Marvel fans between theatrical releases," said Swinburne.

Swinburne also said Marvel will play a large role in achieving international streaming subscribers. Disney estimates roughly two thirds of its Disney+ subscribers will come from outside the U.S., bolstered by the international appeal for Marvel's brand.

The firm has an overweight rating on the stock and a $160 price target. The company, who's market value is around $253 billion, is trading around $140 per share.

— with reporting from CNBC's Michael Bloom.