Dow Jones entertainment giant Disney appears to be victorious in its long-standing board battle following its annual shareholder meeting on Wednesday.
Disney shareholders on Wednesday voted to elect its entire slate of 12 board nominees over nominees from activist investors Trian Fund Management and Blackwells Capital. The Dow giant has been battling against Trian and Blackwells, which have campaigned for influence over the board.
Final voting tallies are subject to certification from Disney's independent inspector of elections and final results will be published in the coming days.
"I want to thank our shareholders for their trust and confidence in our board and management," CEO Bob Iger said in a press release. "With the distracting proxy contest now behind us, we're eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers."
Disney Backers
Disney on Tuesday pulled ahead of Trian with more than half of all shares voted, the Wall Street Journal reported citing unnamed sources familiar with the matter. BlackRock, Disney's second-largest shareholder with 78 million shares, and Baltimore-based T. Rowe Price, which owns 9.3 million shares, are backing the House of Mouse. CNBC on Tuesday reported that Vanguard is also backing Disney management. State Street's position, Disney's third-largest shareholder, is unclear. Meanwhile, the tally could change as voting continues through Wednesday's annual meeting.
Nelson Peltz's Trian Partners on Monday said two institutional investors expressed support for both of Trian's nominees, The Fly reported. The California Public Employees' Retirement System (CalPERS) and global asset manager Neuberger Berman support Trian's position. Peltz also won the backing former Marvel chairman Ike Perlmutter, New York City's retirement fund, and proxy advisory firms ISS and Egan-Jones, CNBC reported.
"We believe there is opportunity to strengthen relevant policies and practices and that the board may benefit from the addition of a fresh perspective and more independence," Neuberger Berman wrote.
About 32.4% of Disney shareholders are retail investors, according to FactSet figures
Trian in December nominated Peltz and former Disney CFO Jay Rasulo to the board. In February, the group recommended Disney shareholders vote in favor of its pair of nominees to replace Michael Froman and Maria Elena Lagomasino. Trian in January set a target for reaching margins of 15% to 20% by 2027, using Netflix as a guide.
Disney Target Hiked
Meanwhile, BofA on Monday raised its price target on Disney stock to 145 from 130 and kept a buy rating on the shares, The Fly reported. The firm said theme park performance remains robust and projects operating income to grow in the low-to-mid teens in the second quarter. Disney in Q2 should continue its strong underlying momentum that was reported in Q1, while CEO Bob Iger appears to be in control and on a growth offensive, the BofA note said.
Elsewhere, UBS last week hiked its price target on DIS stock to 140 from 120, according to The Fly.
Analyst John Hodulik forecasts a 25% three-year compound annual growth rate for Disney earnings, and $9 billion in free cash flow for 2024. He sees that ballooning to $14 billion by 2026. The note also said free-cash-flow growth should support dividend growth, as well as ramp up stock buybacks and incremental investments.
UBS remains bullish on Disney stock with a buy rating, Hodulik wrote.
UBS' free-cash-flow outlook is ahead of the FactSet consensus of $8.2 billion for 2024. FactSet analysts expect Disney free cash flow to increase to $10.26 billion in 2026.
DeSantis, Disney Settle Feud
Meanwhile, Daiwa analyst Jonathan Kees on Monday said Disney's settlement with Florida Gov. Ron DeSantis "removes a risk that has hung over the name," according to a research note also reported by The Fly. Daiwa maintained a buy rating on DIS stock with a $133 price target.
Disney and Florida Gov. Ron DeSantis on Wednesday reached a settlement agreement regarding the Central Florida Tourism Oversight District. The oversight district runs the special tax district in which the Walt Disney World theme park is located. The settlement ends a multiyear dispute between DeSantis and the Dow Jones company. The disagreement started over Florida's 2022 Parental Rights in Education Act, dubbed the "Don't Say Gay" bill by critics, which restricted discussions in classrooms of sexual orientation and gender identity.
Under Wednesday's settlement, the Central Florida Tourism Oversight District agreed to work with Disney to update the 2020 comprehensive plan. The settlement also included two new DeSantis appointees to the district board. Disney executives indicated they can work with the current structure, NPR reported.
The settlement opens the door for additional theme-park development in Florida. Disney plans to invest $17 billion in Florida over the next decade as part of a $30 billion spending plan to upgrade its theme parks.
Disney Stock
DIS stock retreated 3.1% Wednesday after the meeting. Shares rose about 1% Tuesday, recovering from a slight decline Monday. The stock rose for four consecutive trading days leading up to Monday's dip. DIS rallied more than 35% in the first quarter, outpacing Disney's Dow Jones cohorts by a wide margin.
Disney stock is extended above a buy zone for a cup-with-handle base after an early March breakout.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
