- The massive popularity of Baby Yoda memes suggests Disney Plus is performing well in childless households, Rosenblatt Securities said in a Wednesday note.
- A streaming video survey prompted the research firm to raise its first-quarter subscriber expectation for Disney Plus to 25 million from 21 million.
- The survey showed increased awareness of the streaming service's offerings, healthy subscriber growth after the initial 10 million sign-ups, and strength among households with children, analyst Bernie McTernan added.
- Watch Disney trade live here.
Baby Yoda's rapid ascent to meme-stardom is an early indicator of Disney Plus's success, Rosenblatt Securities analyst Bernie McTernan wrote in a Wednesday note.
The firm raised its expectation for Disney Plus subscribers to 25 million at the end of the company's first fiscal quarter, up from the previous 21 million projection. A recent survey revealed heightened awareness of Disney Plus' offerings, healthy subscriber growth after the initial 10 million sign-ups, and strength among households without children, Rosenblatt said.
Penetration was 43% in households without children, the analyst added, with Disney "potentially benefiting from the viral nature of 'The Mandalorian' and Baby Yoda."
For fiscal 2020, Rosenblatt expects Disney's streaming service to gain 39 million subscribers, up from the previous 35 million estimate. The firm reiterated its $175 price target and "buy" rating for Disney stock.
The target price implies an 18% jump from Disney's current trading price. The entertainment giant traded as much as 2.3% higher on Thursday.
Rosenblatt's survey also showed 29% of respondents unsubscribing from a separate service as a result of their move to Disney Plus, and 9% specifically stating they left Netflix for Disney's new offering. The legacy streaming platform will remain a major player in the sector, but the survey results point to a strong start for Disney's entry into the space, McTernan wrote.
"While we expect Netflix to be a long-term secular winner as it maintains its global streaming market share, we see the potential for near-term disruption as new streaming services launch," the analyst wrote.
Disney traded at $147.74 per share at 3:00 p.m. ET Thursday, up roughly 36% over the past year.
The company has 25 "buy" ratings, nine "hold" ratings, and one "sell" rating from analysts, with a consensus price target of $156.04, according to Bloomberg data. Rosenblatt is tied for having the highest price target for Disney stock.
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