Credit Suisse upgrades Disney after stock tanks on earnings — 'More beauty than beast'

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Mickey Mouse and chief executive officer and chairman of The Walt Disney Company Bob Iger prepare to ring the opening bell at the New York Stock Exchange (NYSE), November 27, 2017 in New York City.

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Credit Suisse raised its rating of Disney shares to outperform from neutral, citing its expectation for a successful launch of the company’s streaming video platform, a day after shares tanked 5% on disappointing earnings.

“While Disney [stock] has outperformed the S&P 500 by 8% YTD, we see scope for further upside to Disney+ investor sentiment into its U.S. launch, ” Credit Suisse analyst Douglas Mitchelson wrote in a note to investors. “We see a number of positive catalysts the next few quarters and believe downside risks to Disney estimates are now well understood by investors.”

The firm believes a successful launch of the Disney+ video streaming platform in November will likely increase investor “confidence in the global opportunity for the service,” Mitchelson said in his note titled, “More beauty than beast.”

“We expect numerous marketing / distribution partnerships to be announced over the next few months; management noted Google, Amazon and Apple as likely, but also broad wireless, broadband and pay TV is likely,” Mitchelson added.

Credit Suisse also raised its price target on Disney to $150 a share from $130 a share. Disney’s stock rose nearly 1% in premarket trading on Thursday from its previous close of $134.86 a share.

– CNBC’s Michael Bloom contributed to this report.

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