The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Disney Stock Forecast

Summary:

Disney’s stock price is already up more than 17% since my November 8, 2016, buy recommendation.

The tremendous box office success of Rogue One: A Star Wars Story movie could inspire more investors to buoy DIS’s stock price higher.

Disney has five of the ten top-grossing movies of 2016. Rogue One has grossed more than $1.03 billion in spite of it only getting released last month.

Derivative income from sales of Rogue One DVD, toys, and merchandise good could contribute another $500 million.

Long-term algorithmic forecasts are endorsing a buy rating for Disney’s stock.

I am again rating Disney (DIS) as a Buy. The stock is already up more than 17% since my previous November 8 buy recommendation. However, the impressive billion-dollar box office success of Rogue One: A Star Wars Story movie should inspire more retail and institutional investors to rally behind Disney’s stock.

Disney now has the top 5 most successful movies of 2016. The markets are in love again with Disney’s stock after Rogue One became the 2nd– top grossing movie of last year. Investors often go long on DIS when its movies perform well. Rogue One’s total cinema take could go higher since it is still playing in theaters right now.

Rogue One’s $200 million production budget is now well paid for by its $1 billion worldwide gross achievements.

(Source: Box Office Mojo)

A check on the-numbers.com also echo the estimates of Box Office Mojo. Disney’s stock is attractive right now because the company produced four billion-dollar-plus movies last year. Disney’s Moana and Dr. Strange are also movies with more than $533 million in global ticket sales. Those two movies will also likely become multi-sequel franchises like the Captain America and Star Wars movies.

(Source: the-numbers.com)

My November 8 article discussed the trickle down economic benefits of hit movies. I again predict that Rogue One will generate more income for Disney through paid streaming, licensed merchandising, and DVD/BlueRay sales. Amazon (AMZN) is already selling $19.99 streaming version of Rogue One. Star Wars fans are also pretty loyal. Many of them are willing to spend more money on owning the latest toys, clothing, and items to add to their Star Wars collection.

The 2017 Line-up Is Also Strong

Disney’s stock could hit $120 if the five of the 14 movies that the company will release this year again deliver worldwide revenue of more than $1 billion each. Disney’s 2017 movie line-up includes Star Wars: The Last Jedi, Marvel’s Thor: Ragnarok, and Beauty and the Beast. These three upcoming movies could be billion-dollar earners too. The 2017 version of Pirates of the Caribbean set for May 2017 release could also generate more than $800 million.

Cars 3 and National Treasure 3 could also generate more than $500 million in global sales. Cruella, the spin-off movie based on the hit movies 101 Dalmatians, is also a guaranteed big ticket sales generator for Disney this year. All these upcoming movies will help Disney its leadership position (26.3% share of box office sales) in North America.

Buena Vista, Disney’s wholly-owned subsidiary, is the top-grossing film studio in North America. Disney maintaining its lead in North America is very important. The movie business made $11.36 billion from North America last year.

(Source: Statista)

Hit Movies Help Disney Improve Its Theme Parks & Amusement Centers

The profit from hit movies like Captain America, Finding Dory, and Rogue One definitely helps Disney improve its Theme Parks & Amusement Centers. The success of the Iron Man movies is now why there’s a recently-opened Iron Man Experience attraction in Disneyland Hong Kong.

Tourists from China and other Asian countries, therefore, has a new reason to again visit and spend money Disneyland Hong Kong this year. My point is that any hit movies could become new attractions for Disney’s theme parks.

Conclusion

Disney’s Star Wars and Marvel Super Heroes franchises will guarantee it delivers several hit movies every year. The added income from hit movie-inspired merchandise sales and DVD/BluRay/streaming also adds billions more to Disney’s future revenue streams.

Long-term value investors should, therefore, add more DIS to their portfolios. The long-term algorithmic forecasts for Disney’s stock are all positive. Hit movies is a strong incentive for us to bet that DIS will hit $115 before 2017 ends.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

I Know First Past Success With DIS

I Know First has been bullish on Disney shares in past forecasts. On October 2nd, 2016, an I Know First analyst wrote a bullish outlook on DIS, explaining how Twitter would be a poor acquisition choice for Disney and that the current investment into brands like Marvel is paying off greatly. This outlook had complimented I Know First’s AI-based algorithmic prediction on DIS shares. Since then, DIS shares have risen by 20.33% to date.

This bullish forecast for DIS was sent to I Know First subscribers on September 29th, 2016. To subscribe today click here.