Disneyland And Universal Studios Reopening Should Give Disney, Comcast A Much-Needed Boost

California Gov. Gavin Newsom’s announcement to set aside the tiered reopening structure of his “Blueprint for a Safer Economy” plan and fully reopen the state’s economy on June 15 if health safety criteria are met has spurred Bank of America Securities to reaffirm its “bullish thesis” on Walt Disney Co DIS and Comcast Corporation's CMCSA Universal Studios division.

A Return To Normalcy: Although the Disney and Universal theme parks have been open in Florida and Asia at reduced capacity levels since last summer, their California theme parks have been closed since the COVID-19 pandemic took root in March 2020.

Universal Studios Hollywood is scheduled to reopen on a limited capacity basis on April 16 and the Anaheim-based Disneyland is set to follow on April 30.

Research analyst Jessica Reif Ehrlich wrote in a note that the Newsom announcement “gives us increased confidence of a pending recovery, potentially much earlier than previously expected.”

She noted the combination of the theme parks’ return to normal attendance levels coupled with the studios’ major summer movie releases, including Universal’s “Fast and Furious 9” on June 25 and Disney’s “Black Widow” on July 9, could result in both companies turning in vibrant financial performances.

Related Link: Disneyland Plans Expansion Of California Theme Park

Votes Of Confidence: Ehrlich reiterated a Buy rating for Disney and a price target of $223, adding that the company’s Parks, Experiences and Consumer Products (PECP) segment can potentially rebound faster than expected.

“Assuming capacity limitations are lifted, DIS’ PECP segment has the potential to meaningful outperform our base case and even potentially our bull case estimates, which outlined a return to normalized revenue levels in California by F3Q22E,” she wrote. “As a result, our bull case scenario (which attributes $100/s for PECP) based on $29.4bn in revenue and $9.4bn in OI in FY23E, appears increasingly likely.”

With Comcast, Ehrlich reiterated a Buy rating and a price target of $69.

“While theme park revenue and EBITDA equaled only approximately 6% and 7% of consolidated revenue and EBITDA pre-pandemic, respectively," she wrote, "with Universal Hollywood representing just a portion of those figures, we are increasingly confident that our 2021 base case theme park estimates of $3.7bn in revenue and $304mn in EBITDA will prove conservative.”

Related Link: Disney Shakes Up Film Release Schedule ... Again

(Universal Studios Hollywood photo courtesy Loren Javier / Flickr Creative Commons)