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Can Star Wars–Based Theme Parks Boost Disney’s Revenue?

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Apr. 11 2019, Published 10:54 a.m. ET

Star Wars theme parks

The Walt Disney Company (DIS) received an analyst upgrade on April 10. BMO Capital analyst Daniel Salmon has a positive opinion on the company’s launch of two Star Wars–themed domestic parks, its release of its streaming service Disney+, and the new movies it has lined up for 2019. Analysts are also hoping to see the restart of the company’s buyback program next year. All these positive factors have led Salmon to upgrade Disney to an “outperform” from a “market perform.”

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Disney plans to open Star Wars: Galaxy’s Edge in both Disneyland and Disney World by summer 2019. The company successfully opened Toy Story Land in Shanghai and Toy Story Land in Orlando in 2018, and it plans to make considerable investments in new hotels, cruise ships, and locations in places such as Paris and Tokyo.

Disney’s investment in theme parks

Disney’s investment in theme parks has generated significant revenue for it. In the first quarter of 2019, Disney’s Parks, Experiences, and Consumer Products segment reported revenue growth of 5% YoY (year-over-year), while its operating income rose 10% YoY driven by consistent revenue increases at its parks and resorts led by increased guest spending and a higher number of occupied room nights.

The company’s peers Comcast (CMCSA) and SeaWorld Entertainment (SEAS) have also been investing in theme parks to attract more customers.

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