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Bob Iger Back at Disney Makes Wall Street Really, Really Happy

Bob Chapek is out. The Magic Bob is back. Hip-hip-upgrade!

BEVERLY HILLS, CALIFORNIA - SEPTEMBER 07: The Walt Disney Company Former CEO and Chairman Robert Iger speaks onstage during Vox Media's 2022 Code Conference - Day 2 on September 07, 2022 in Beverly Hills, California. (Photo by Jerod Harris/Getty Images for Vox Media)

Robert Iger speaks onstage during Vox Media’s 2022 Code Conference – Day 2

Getty Images for Vox Media

Welcome back to the Bob Iger Clubhouse. That crowd out front? Oh, just Wall Street analysts and investors lining up to kiss the ring.

Following the shocking news Sunday night that Robert Iger had returned as Disney CEO to replace his own successor in Bob Chapek, company stock (DIS) jumped as much as 10 percent. Don’t let the park gates hit you on the way out, Chapek.

The Iger resurrection was enough for research firm Moffett Nathanson to declare the “Magic Is Back.” The equity analysts upgraded shares of DIS to “outperform,” or a Buy, with a new price target of $120 (+$20 from its previous $100 PT). In its own early reaction, Wells Fargo reiterated its prior price target of $125 and “Buy” rating.

“We applaud Disney’s Board for the courage to make this change,” Moffett Nathanson wrote.

While Wells Fargo was early money on recommending Disney as one of its “signature picks,” Moffett Nathanson has not hawked the stock since May 2020. It’s grown increasingly wary of Chapek’s streaming strategy, saying the former parks guru “had become wedded to a streaming strategy that did not make sense given today’s reality.” The subscriber targets were “unrealistically high,” Michael Nathanson and his group said.

Further impacting potential ROI at streaming was the “poor decision” to shift Disney+ “from Disney-themed family and branded content into a general entertainment fare.” Nathanson wants Disney+ to return its focus to superfans (and their higher RPU, or revenue per user) and not chase the highest-possible subscriber total. At Wells Fargo, Steven Cahall and his team echoed what the Iger reappointment means for content — and for investor confidence, calling Iger “a steady leader in uncertain times.”

Some examples of Disney+ going general in the past two and a half years include the move of “Dancing With the Stars” from ABC to the streamer and bringing adult-themed Marvel shows, like “Daredevil,” “Luke Cage,” “Jessica Jones,” “The Defenders,” “The Punisher,” and “The Iron Fist,” aboard the core streaming service (instead of, say, Hulu).

Another thing Nathanson didn’t love from the Chapek regime was a restructuring into the new DMED (Disney Media and Entertainment Distribution) division. They believe the move “hurt the morale of the creative leadership” and “slowed decision-making.” Iger allowed for more freedom, and his results speak for themselves.

The DMED shakeup greatly empowered Chapek’s No. 2 Kareem Daniel; without his Bob, where does that leave Kareem? Probably not fully enjoying his Thanksgiving dinner this week. “DIS doesn’t shake things up without more changes to come,” Wells Fargo broadly cautioned.

Finally, with Chapek out and Iger back, ESPN may face some serious cost-cutting, Moffett Nathanson warned. That means being far more frugal with pricey sports rights, which are already out of control, and probably walking away from some non-core properties altogether.

“We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” chairman of the Disney board Susan Arnold said in a statement last night. “The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.”

“I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO,” Iger, who oversaw Disney from 2005 to 2020, said. “Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe — most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”

Just in time for Disney 100.

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