'Avengers: Endgame' could supercharge Disney shares, analyst says

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Disney’s end game is looking bright.

Shares of the entertainment giant rocketed to an all-time high of $137.24 per share on Thursday ahead of opening weekend for “Avengers: Endgame,” the final chapter in a four-film franchise featuring characters from across the Marvel universe. The film is expected to break numerous box-office records, including the best-selling opening weekend in history and the fastest movie to reach $1 billion in ticket sales.

Thursday’s move was also fueled by bullish presale data, reports that Comcast is considering selling its Hulu stake to Disney and the recent unveiling of Disney’s in-house streaming service, Disney+. Wall Street is now the most bullish it’s been on Disney in nearly two decades, according to FactSet.

Better yet, some market watchers say the magic is still there.

“I still think it goes a bit higher,” Mark Newton, managing member and founder of Newton Advisors, said Thursday on CNBC’s “Trading Nation.” “My technical targets are up near $150 to $155, so you could see a little bit more on the upside. Tough to take profits with a stock at brand-new highs.”

Newton said that while the stock is clearly overbought here, he sees the positive momentum continuing into May “before we top out.”

“It’s just broken out of, really, a three-year base on very, very good volume. So, yes, it is near-term overbought, but any pullback would be a chance to buy into this stock, ideally from, really, $120 to $130 area,” he said. “[It’s] really premature to think about selling right now based on technical and fundamental reasons.”

Strategic Wealth Partners President and CEO Mark Tepper, on the other hand, said the segment that the stock was “priced for perfection.”

“Demand for Disney’s through the roof right now,” Tepper said. “Disney+ actually impressed me with their $6.99 [per month subscription] offering. I didn’t expect them to come in that low. But, quite frankly, the stock right now is priced for perfection right around 137 bucks. I wouldn’t be chasing it.”

Tepper noted that, historically, Disney shares have traded at a roughly 7% premium to the broader stock market. But, now, it’s more than 30%.

“A 7% premium would have them priced at 112 bucks. At a 40% premium, which is high, that would have them only at $145, so there’s not a lot of upside from here,” he said. “A 30 to 40% premium, quite frankly, is a lot of risk that you could be taking on just a single position.”

And with the jury still out on how Disney+ will compare with other, more established streaming services, Tepper wouldn’t get too excited about the Mouse House’s stock at these levels.

“We’re looking at a five-year cash burn on their streaming business and, really, there’s a lot of inherent execution risk on their overall five-year streaming plan where we really don’t know how it’s going to pan out,” he said. “Great company, but any hiccup and this thing’s going to rerate lower, so we wouldn’t be chasing it.”

Disney’s stock is up more than 25% year to date.

Disclosure: Strategic Wealth Partners owns shares of Disney for its clients. Additionally, Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.

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