The growth story for Disney 's streaming business appears to be running out of steam, according to Barclays. Analyst Kannan Venkateshwar downgraded Disney to equal weight from overweight, saying Monday in a note to clients that the company's long-term subscriber goals seemed optimistic. "The roll out of Disney+ has been the most successful streaming launch ever, which is remarkable given that the company achieved this with very little new content," the note said. "This year however, Disney+ growth has slowed significantly, despite launching new franchise titles, day and date movie releases and Star+. Part of this slowdown could be a function of growth pull forward into 2020 and promo roll offs, but we believe it could be due to structural factors capping growth." Disney reported in August it had 116 million subscribers for Disney+ and Hotstar, its international arm, as of July 3, up more than 100% year over year. The company also had more than 57 million combined subscribers for Hulu and ESPN+. However, Disney+ is producing significantly less new content than Netflix, and the Hotstar service in India also faces a big risk from expiring sports rights to cricket, Barclays said. "In order to get to its long term streaming sub guide, DIS needs to more than double its current pace of growth to at least the same level as Netflix. We believe this may be tough to do. ... Consequently, we take estimates for Disney+Hotstar subs to ~200mm subs in 2024 vs the 250mm guidance midpoint," the note said. Barclays cut its price target on Disney to $175 per share from $210 per share. The stock closed at $176.46 per share on Friday. The firm also cut its fourth quarter and 2022 earnings estimates for Disney. Shares of Disney have gained nearly 40% over the past 12 months but have pulled back and traded sideways since peaking in mid-March. —CNBC's Michael Bloom contributed to this report.
The New York Stock Exchange welcomes The Walt Disney Company (NYSE: DIS), on Tuesday, May 4, 2021, in honor of Star Wars Day.
The growth story for Disney's streaming business appears to be running out of steam, according to Barclays.