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While the daily top analyst upgrades and downgrades rundown included many names, one analyst call that also stood out on Thursday came from Goldman Sachs. The firm’s Drew Borst has reinstated its coverage of Walt Disney Co. (NYSE: DIS) with a Buy rating on the heels of its $65 billion cash acquisition of Fox assets.

The $142 Goldman Sachs price target is more than 10% higher than the $127.50 consensus analyst target from Refinitiv, and it represents an implied upside of 26% from the $112.52 closing price ahead of the analyst call. Disney also has that 1.6% dividend yield for total return investors. Disney’s stock has been a significant underperformer in 2019, with the Dow Jones industrials and S&P 500 handily up by double-digits and Disney shares up less than 3% year-to-date.

The analyst’s key focus of the call is the recently completed Fox acquisition. The deal is being viewed as a positive long-term strategy for Disney and its direct-to-consumer pipeline.

The report said:

It is the dawn of a new era at Disney. The $70 billion acquisition of Fox is now closed and the approaching debut of Disney+ streaming service in late calendar year 2019 marks a momentous shift in the company’s content monetization model from third-party licensing to direct-to-consumer streaming.

Goldman Sachs also sees the Fox acquisition bringing economies of scale and stronger bargaining power with distributors. There is also content diversification with Fox’s adult programming and an increased international reach for broader distribution.

As far as cost synergies, that estimate is being put at about $2 billion by the second year’s completion. That is about 11% of expected pro forma operating income for 2019.

This upgrade is also after “Avengers: Endgame,” due to be released on April 26, has broken the record held by “Star Wars: The Force Awakens” in pre-sales. In fact, the movie pre-sales have been reported to have broken that record in six hours versus the full 24-hours for the Star Wars film.

Disney shares were trading up 1.3% at $114.03 early Thursday, in a 52-week range of $97.68 to $120.20.

Note that most Dow and S&P 500 stocks getting Buy and Outperform ratings come with an implied 8% to 10% total return to the price target at this stage of the bull market. This call on Disney is almost three times that, and it is after Disney leveraged up for the Fox acquisition.

This is not the only bullish post-merger analyst call on Disney, nor is it the most bullish of all analysts, despite being more than 10% higher than the consensus price target. Rosenblatt Securities started coverage on April 2 with a Buy rating and a $150 price target. That call noted that Disney is a more attractive way to invest into streaming media than Netflix ahead of its Disney+ streaming service. The firm expects Disney to have 15 million subscribers by 2021 and growing to a combined 190 million subscribers for all of its streaming services by 2023.

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