Following reports that suggest Walt Disney (NYSE:DIS) may migrate its flagship sports content to ESPN+, Citi analysts said the move could be worth $20 per share.
Analysts, who have a Buy rating and $125 price target on DIS, wrote in a note Thursday that while at one level, it makes sense, at another "the market's muted reaction is surprising."
"Investors view the move to streaming as inevitable," said analysts. "We believe ESPN's transition to streaming could add ~$20 per share to Disney's equity value."
"The lion's share of the upside we see stems from: 1) sports fans that have already cut the cord signing up for ESPN+, and 2) higher ARPU from existing ESPN+ subs," analysts concluded.
Disney shares are up around 0.5% premarket. However, the stock has declined more than 12% in the last three months, trading near the $89 mark.