Media giant Walt Disney Co DIS saw its shares hit nine-year lows in August 2023.
Since then, stocks have rebounded and a major lingering negative has been resolved. With an activist battle set to unfold next week, here’s a look at how the company’s recent victories could minimize the potential for changes from activists.
What happened: Trian Partners CEO Nelson Peltz has led an activist battle against Disney that will be the focus of next week’s trading week, with Disney’s shareholder meeting on April 3.
Peltz nominated himself and another director to Disney’s board of directors. Activist investor Blackwell He has also made appointments to Disney’s board of directors and is pushing for changes in a separate battle against the media company.
Peltz argued that Disney shares have underperformed in recent years due to poor management and a lack of vision.
“Disney is the most advantaged consumer entertainment company in the world and should have had a ‘winning hand’ in today’s evolving consumer entertainment landscape, Disney has lost its way over the past decade,” Trian said in a presentation.
Trian said Disney lost its dominance at the box office and with animation, entered the streaming market late and made several ill-timed acquisitions.
Stock performance: The bad news for Peltz may be the timing of his push, and the shareholder meeting to vote on the board of directors comes poorly timed.
Disney shares hit a new 52-week high of $123.74 on Thursday and are now up 36% year-to-date in 2024. Shares are trading at levels last seen in August 2022 and the most highest ever recorded by the CEO. Bob Iger he rejoined the company in November 2022.
To shareholders and investors, the stock now looks like Iger’s plan worked.
Since Iger resumed his role as CEO, Disney shares have risen 22.2%.
Benzinga previously reported that an investment in Disney stock during Iger’s past tenure as CEO from September 2005 to February 2020 was up 457.6%. During the former CEO of Disney By Bob Chapek run at the helm of the media company, shares fell 27.4%.
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Key Holder: While Disney will need support from its shareholders, the company has won support from several key voices, including the grandchildren of Disney’s cofounders. Walt Disney AND Roy Disney.
Disney also has the support of the creator of Star Wars George Lucas, who is a key shareholder of the company.
Along with key support, recent analyst notes and price target increases could signal support for the current management team. Analysts who would like to see changes at Disney would likely wait to issue new price targets until the battle is decided next week.
Here’s a look at recent analyst ratings for Disney.
Barclays: Upgraded from Equal to Overweight, raised price target from $95 to $135
UBS: Buy rating, price target raised from $120 to $140
Needham: Buy rating, raise price target from $120 to $145
DeSantis Settlement: Disney recently announced a settlement over legal issues related to the governing district of its Florida theme parks.
The media company was waging a war with the governor of Florida. Ron De Santis on the Central Florida Tourism Supervisory District.
DeSantis and Disney both declared victory in the deal, and Disney can now move forward with plans to spend billions of dollars to grow and expand its theme parks in Florida.
This was previously a persistent problem for Iger and Disney and could have been a negative highlighted by activist investors. With the deal, Iger has another win to celebrate for the company.
What’s next: Disney shareholders will vote on April 3 for Disney’s board of directors.
It was reported by CNBC that Trian Fund Management refused to vote for Iger when it voted for the board of directors. The move conflicts with public statements that he wants to work with Iger in the future.
Investors and shareholders could see this move by Trian, which could change its vote anyway, as a potentially heated battle if the board of directors is changed. Trian said he supports Peltz, but his vote proves otherwise.
Disney used this element in recent comments encouraging shareholders to vote against Peltz’s nominees.
The appointment of Trian’s nominees would see Trian push for changes that include spinning off or finding partners for the linear TV legacy, focusing on margins for streaming and working on a succession plan for Iger, whose retirement is expected for 2026.
DIS Price Action: Disney shares closed at $122.36 on Thursday versus a 52-week trading range of $78.73 to $123.74.
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