Disney stock could surge 40% if the company exits the direct-to-consumer streaming business, according to Wells Fargo analyst Steven Cahall. High costs from services like Disney+ currently obscure the value of profitable segments such as theme parks and intellectual property.
Cahall argues that returning to a content licensing model could generate over $15 billion in annual revenue. This strategic shift would de-risk earnings and allow management to refocus on core strengths.
Wells Fargo lowered its immediate price target for Disney from $146 to $125. The firm maintained an Overweight rating on the stock, citing potential value from a strategic reevaluation of streaming.