What’s next for Disney and Ford? Here’s our take on the latest news
Walt Disney (DIS) and Ford Motor (F) could both be at turning points. Here’s the latest news on both club holdings as of Thursday and our take on where things stand. Disney Might Sell Hulu The News: In a research note this week, analysts at Citi argued that Disney may be more likely to sell its 67 percent stake in streaming platform Hulu. The Citi rating comes weeks after Disney reported better-than-expected first-quarter results for fiscal 2023, with CEO Bob Iger pledged to realign the entertainment giant to “core brands and franchises” and contain costs. Iger also unveiled a sweeping restructuring program as part of a larger effort to turn its ailing direct-to-consumer (DTC) unit — which owns streaming platforms Hulu, Disney+, and ESPN+ — profitable. In a post-earnings interview with CNBC last month, Iger suggested selling Hulu to rival Comcast (CMSCA), which owns the remaining 33% stake in the platform. Comcast is the parent company of NBCUniversal and CNBC. Iger’s comments led Citi analysts to suspect that Disney “may moderate content spending, raise prices, and potentially relegate its DTC offering to niche status.” If Disney were to sell Hulu, analysts think it could secure distribution rights to The Incredible Hulk and Namor, two Marvel characters owned by Universal. Disney owns all of Marvel’s intellectual property. “While the cost of securing these rights is likely small relative to Hulu’s value … it would be consistent with Mr. Iger’s desire to focus on core brands and franchises,” the analysts wrote. Citi reiterated a buy rating on Disney stock and a price target of $130 per share. Disney shares, which are up more than 13% year-to-date, edged up to $98.68 a share Thursday afternoon. The Club Take: With Bob Iger back in the corner office, everything is on the table. The longtime Disney exec’s new strategy is helping to put the ship in order and should ultimately bring profitability to the company’s streaming unit. Iger has said he wants to empower creative leaders at Disney to hold them accountable for how content is created, distributed and monetized. But Disney should also lean toward its existing franchises and focus less on general entertainment as it works to moderate spending in its DTC division. Ultimately, we believe that if Iger implements its restructuring plans, the stock can eventually go even higher and sustain us over the long term. We reiterate our 1 rating on the stock, meaning we would buy shares of Disney on here. Ford reports solid monthly sales. The news: Club holding company Ford said Thursday it sold 157,606 vehicles in the US in February, a 21.9% year-over-year increase that shows supply woes are easing. But that figure was below analysts’ forecasts for sales of 162,000 vehicles. Internal combustion engine vehicles remained the most popular with 144,926 units sold last month, followed by hybrid vehicles. Ford sold just 3,523 electric vehicles (EVs) — a key part of the company’s transformation plan — but that represented a 68% increase on a yearly basis. Meanwhile, Ford said Thursday it plans to resume production of its F-150 electric pickup truck on March 13, a month after it stopped manufacturing the electric vehicle due to a battery problem. Shares of Ford were up more than 1% late Thursday afternoon to $12.47 each. The Club Takes: Ford’s monthly sales may indicate a positive step forward, but we’re not sure how that translates to profits yet. Additionally, Ford’s restructuring has created production issues, leading to a chaotic fourth-quarter earnings report last month. At the time, CEO Jim Farley cited ongoing “execution issues” that gave us pause. We were at least pleased to see that the F-150’s battery issue was no longer a drag. But we originally bought shares in the automaker because of its decision to exit unprofitable businesses and transform the company into a leader in electric vehicles while boosting profits through large-scale manufacturing. But our investment case has been put to the test. If Farley can’t execute his strategy by the time Ford reports first-quarter results, we have no choice but to divest the stock. (Jim Cramer’s Charitable Trust is Long F, DIS. A full list of stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling any stock in his charitable foundation’s portfolio. When Jim spoke about a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS GOVERNED BY OUR TERMS AND CONDITIONS AND PRIVACY POLICY ALONG WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION SHALL BE OR CREATED BY YOUR RECEIVING OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC RESULT OR PROFIT IS GUARANTEED.
The Disney+ website on a laptop computer in the Brooklyn borough of New York, United States, on Monday July 18, 2022.
Gaby Jones | Bloomberg | Getty Images
Walt Disney (DIS) and Ford engine (F) could both be turning points. Here’s the latest news on both club holdings as of Thursday and our take on where things stand.