Wall Street showed ongoing — and understandable — frustration with Walt Disney ‘s (DIS) lackluster share-price performance, while retailer TJX Companies (TJX) and ecommerce giant Amazon (AMZN) are poised to see their stocks climb higher. Here’s a look at three Club holdings in the news Thursday, and the implications for our investment case in each. DIS YTD mountain Disney’s year-to-date stock performance. The news: KeyBanc downgraded Disney to the equivalent of a hold, from buy, citing “meaningful uncertainty” and a lack of positive catalysts for the media-and-entertainment giant’s stock. In a research note Thursday, the firm said investor expectations around Disney’s theme-park business may be too high, and argued that Disney+ and Hulu subscriber growth “has stalled.” KeyBanc also expressed concerns about ESPN’s move to streaming, away from the traditional cable-TV bundle, saying that transition is “materially harder than we initially thought.” The firm’s “worries in 2023 continue into the 2024 financial setup,” KeyBanc analysts wrote. The Club’s take: Disney has been a real laggard, climbing less than 2% so far this year compared with a roughly 14% gain in the S & P 500 . Over the past 12 months, Disney’s performance has been worse, falling nearly 8%. So, it’s easy to understand KeyBanc’s frustration with Disney’s stock. We’re frustrated, too. KeyBanc’s call does not change our view on the company, though, because it comes after sentiment has been sour on Disney for quite some time. Indeed, the firm acknowledges its downgrade “might call the bottom” in the stock, which is trading at a steep discount to its five-year average price-to-earnings multiple. Disney’s intellectual property remains unrivaled and, over time, the company’s market valuation should better reflect that quality. Moreover, losses at Disney’s streaming business are poised to narrow in the coming quarters. One positive catalyst that we see looming for Disney is reinstatement of its dividend, which was suspended during the Covid-19 pandemic. Management said last month that Disney could resume dividend payments in the “not too distant future.” TJX YTD mountain TJX Companies’ year-to-date stock performance. The news: Off-price is “one of the most attractive sectors in apparel retail,” according to Piper Sandler, which on Thursday initiated coverage of TJX Companies with a buy-equivalent rating and $110-per-share price target. The firm’s stock-price objective implies 32% upside from current levels, and appears to the highest among Wall Street analysts, according to FactSet. Piper Sander rates TJX’s off-price peers, Burlington Stores (BURL) and Ross Stores (ROST), the equivalent of hold. TJX, which operates HomeGoods, TJ Maxx and Marshalls, has “clear competitive advantages” with its close vendor relationships and distribution network. “Simply put, we think that TJX is the first call for many vendors” when they have excess inventory, analysts at Piper Sandler wrote in a note….
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