Studio Stocks See Immediate Gains Following Deal to End SAG-AFTRA Strike

Disney sees an extra boost from strong quarterly results

Walt Disney World
Walt Disney World (Credit: Getty Images)

Hollywood studio stocks gained in morning trading Thursday after SAG-AFTRA and the Alliance of Motion Picture and Television Producers agreed on a $1 billion deal to end the three-month long strike.

Shares of Disney added $4.86, or 5.8%, to $89.36. Paramount Global was up 45 cents, or 3.8%, to $12.27.

Warner Bros. Discovery gained 30 cents, or 3.1%, to $9.69. The stock had dropped sharply in afterhours trading Wednesday following a Q3 report that pointed to uncertainty in the advertising market.

The deal gave some juice to nontraditional studios as well. Netflix added 47 cents, less than 1%, to $437.12. Apple edged up 21 cents to $183.10. Amazon gained 10 cents to $142.18.

Sony shares bucked the trend and fell.

The Japanese entertainment and electronics giant posted a 29% profit drop for its fiscal second quarter, missing Wall Street expectations. And while it raised its guidance for sales and profit for its media divisions for the rest of the year, Sony warned investors it might have difficulty meeting its sales target for PlayStation 5 during the crucial holiday season.

Sony’s U.S.-listed stock lost $6.04, or 6.9%, to $81.50.

Disney’s extra boost came from a strong fiscal Q4 report on Wednesday.

Wells Fargo raised its price target on Disney to $115 from $110 and kept an “Overweight,” or “Buy” rating on the shares following quarterly results. The analyst said Disney stock is its No. 1 Media idea, according to TheFly.com

Evercore ISI noted that Disney missed expectations for revenue, but that it beat on profitability thanks to aggressive cost cutting. The analyst said that the company’s guidance for $8B of free cash flow in the next fiscal year was “meaningfully ahead of expectations,”

The firm lowered its full year EPS estimate by 14% to $4.27 from $4.95 because it expects lower segment operating income and some expenses to rise, but it kept an “Outperform” and $100 price target on Disney shares, meaning he expects the stock to rise 18% in the next year. Shares are still down about 10% for the year.

Loop Capital kept a “Buy” rating and $110 price target on Disney, and wrote in a note to clients that the turnaround path for the company is becoming clearer.

Goldman Sachs lowered its price target on Disney to $120 from $125, which still implies expectations for a 42% leap over the next year, and kept a “Buy” “rating on the shares. The analyst said the company is making progress against management’s “lengthy to-do list,” according to TheFly.com, pointing to cost cutting as the most notable sign.

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