Disney to benefit from cost-cutting, streaming tailwinds - CMB International

Investing.com -- Walt Disney (NYSE:DIS) is expected to benefit from cost-cutting and tailwinds from its streaming business, according to analysts at CMB International.

In a note to clients on Monday initiating their coverage with a "Buy" rating, the analysts argued that Disney has shown significant progress in corraling losses from its on-demand video unit, while overall efficiency has improved thanks to initiatives like headcount reductions aimed at reining in expenses.

They also called a proposed joint sports streaming platform that would combine Disney's ESPN network with offerings from Warner Bros. Discovery (NASDAQ:WBD) and Fox "promising," and described its lucrative theme parks segment as a "rising cash cow."

"Disney excels in notable IP brands, content ecosystem and diversified portfolio," the CMB analysts said, adding that the entertainment giant is undergoing a sweeping "transformation" that is expected to result in 16% compound annual growth between this year and 2026.

The comments come as Disney faces a proxy fight with activist investors, including Trian Partners co-founder Nelson Peltz. In February, Peltz criticized Disney's investment plans as akin to throwing "spaghetti against the wall," adding that the firm needed to strive for a Netflix-like streaming business and nail down an executive-level succession strategy. Disney, in response, has refuted many of Peltz's claims.

A major showdown in the board battle looms on April 3, when Disney is set to hold its annual shareholder meeting.