Disney shares: what’s the outlook as CEO Bob Iger steps down

Disney share price: a decade+ of strong performance

Yesterday it was revealed that Robert Iger – legendary CEO of the Walt Disney Company – would be stepping down from the top spot, effective immediately.

He won’t be going far mind you: Mr Iger is set to assume the role of Executive Chairman, and focus more intently on the company’s ‘creative endeavours’.

Since his appointment as the company’s CEO in March 2005, the Disney (NYSE: DIS) share price has risen ~350% – from around US$28 per share in early 2005 to its current price of US$128.

At its recent all-time high, Disney traded up to the US$153.41 mark, as excitement around the company’s Disney+ offering – which many position as a true competitor to Netflix’s streaming throne – reached fever pitch.

Who’s the new CEO?

Bob Chapek, a Disney veteran with over 27 years of experience across the company’s Parks, Consumer Products and the Studio businesses, was named as Disney's new CEO overnight.

‘Mr. Chapek has shown outstanding leadership and a proven ability to deliver strong results across a wide array of businesses,’ said the company’s Board.

With it being added that 'his tremendous understanding of the breadth and depth of the Company and appreciation for the special connection between Disney and its consumers makes him the perfect choice as the next CEO.'

What this means for the company?

Succession plans are always difficult: maybe even more so in the case of Disney. Robert Iger has indeed left an indelible mark on the company, with Mr Chapek saying that:

‘Bob Iger has built Disney into the most admired and successful media and entertainment company.’

While true over the long-term, Disney’s latest quarterly results likely disappointed investors. For the quarter ending December 28, 2019 – though reporting stronger revenues, Disney saw its income, earnings per share and free cash flow decline (FCF).

On the top-line, Disney reported revenues of US$20,858 million (+36%) against net income of US$2,133 million (-23%) and FCF of US$292 million (-68%).

Yet amongst those weaker results, sat the resounding success of Disney+.

'We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,’ said Mr Iger.

Exceed expectations indeed! Disney+ notched up 26.5 million subscribers in a single quarter.

It is successes such as those, as well as substantial progress made on the ‘integration of Twenty-First Century Fox’, that has led Mr Iger to describe his departure from the top spot as optimally timed.

And while some analysts have started to revise their research on Disney in the wake of this CEO change-up, the current analyst consensus suggests that Disney’s outlook is a decisively bright one.

DIS has an average 12-month price target of $161.96 per share: 26 BUY ratings, 8 HOLD ratings and 1 SELL rating, according to Bloomberg Data.