Walt Disney Co. (DIS) stock climbed higher today (Monday) following a blockbuster box-office weekend for its new "Star Wars" spin-off. But is this just a short-term burst for Disney stock, or a sign of more to come?
Disney stock was higher by 2.08% at $106.74 in mid-morning trading on brisk volume.
Before we get into our outlook on Disney stock, here's a look at how "Rouge One" performed over its weekend debut...
Walt Disney Co. (DIS) Stock Jumps on "Rogue One" Opening
As widely expected, "Rogue One" handily won the weekend box office. The film took in $155 million domestically in its opening in 4,157 theaters. The global take was a very healthy $290.5 million. That means "Rouge One" now boasts the second-highest opening in December, behind only Disney's "The Force Awakens."
The opening bodes well for the future of "Star Wars" spin-offs, as well as for Disney stock in 2017 and beyond.
Apart from "Rogue One," the only other upcoming "Star Wars" movies with actual release dates are Episode VIII and Episode IX. Episode VIII is expected in 2017, while Episode IX is expected in 2019.
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Episode VIII has a release date of May 26, 2017. That is 40 years and one day after the release of the original movie that started "Star Wars'" cult-like following back in 1977.
RBC Capital Market's Barton Crockett told CNBC on Friday that "Rouge One" is crucial for Disney. "It's not just 'does this movie do well,' but it's the argument that 'Star Wars' can be an annuity business rather than just a flash in the pan [or a] couple of successful movies."
Blockbuster movies are already critical for Disney, and there's a major reason why we remain bullish on Walt Disney Co. (DIS) stock...
Why We Remain Bullish on Disney Stock in 2017
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While Disney movies are raking it in at the box office, its television properties (particularly its ESPN sports channel) have been a drag.
The company's Q2 2016 results missed expectations in May, largely because of a shortfall in its cable networks and parks and resorts. Disney stock fell 6% in after-hours trading as investors focused on numbers from its media networks, like ESPN's decline in subscribers.
In November, Disney stock slumped after Nielsen reaffirmed its industry-wide data that said ESPN lost 621,000 subscribers in a month.
Concerns about Disney theme park attendance both stateside and abroad have also surfaced. The company confirmed in August that attendance at its U.S. theme parks was down 4% in the three-month period ending July 2, compared with the same period a year ago. A strong U.S. dollar has made it more expensive for international tourists to visit the United States.
Still, Disney is a consumer and media dynamo with one of the world's best brands.
"What distinguishes Disney is the quality of its content and the way consumers associate that content with Disney," Anthony DiClemente, an equity analyst at Nomura/Instinet, told Barron's earlier this month.
DiClemente sees double-digit profit growth in fiscal 2018, as the studio releases four Marvel movies, three animated features from Disney and Pixar, and two "Star Wars" films. He has a $110 price target for Disney.
In addition to prospects for future growth, there is the potential that Disney could pull off a major corporate event. There has been talk that Disney might buy Netflix Inc. (Nasdaq: NFLX) or that it could be sold to Apple Inc. (Nasdaq: AAPL).
Money Morning has been bullish on Disney throughout 2016, and we reiterate that stance.
At $105.71, Disney stock is up just 0.60% year to date. But three- and five-year returns are 42.08% and 204.03%, respectively.
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