Disney shares see a bump after being upgraded to outperform at Macquarie Research

Shares of Walt Disney Co. rose more than 1% after being upgraded to outperform from neutral by analysts at Macquarie Research on Tuesday. Analysts said in a note to investors that the company's distribution leverage and optionality, as well as its concentration of valuable intellectual property, which should only improve with the acquisition of 21st Century Fox Inc. , are reasons for the upgrade. They also cited Disney's continued impressive theatrical momentum. "In an increasingly concentrated space where content is still king but now requires direct-to-consumer distribution, Disney has by far the highest chance of success," lead Macquarie analyst Tim Nollen wrote. Nollen's view is that media companies with ad-driven models will continue to struggle, while those with subscription models will win out in the end. Disney, with its new standalone streaming service coming in 2019, is in a position of strength. Nollen also said Disney could be one of the biggest winners from tax reform, with an estimated 10% to 13% upside to 2018 earnings from tax benefits. Disney shares are up more than 4% in the last 12 months, while the S&P 500 index is up 20% and the Dow Jones Industrial Average is up 25%.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.