In a research note this morning, Goldman Sachs analyst Drew Borst upgraded Disney (DIS) to Buy on 2018 growth acceleration. Among the key drivers, the analyst believes the company's film slate in 2018 might be "the best ever," while the company will potentially benefit from the new U.S. administration's corporate tax reform. The upgrade comes after Borst's peer at Pivotal Research had cut his rating on the Dow member's stock to Sell late last week, citing a riskier political environment.

KEY DRIVERS AHEAD: This morning, Goldman Sachs' Borst upgraded Disney to Buy from Neutral and raised his price target on the shares to $134 from $109. The analyst told investors that even with recent outperformance, he sees 24% upside over the next 12 months driven by an acceleration in 2018 estimated earnings per share growth. Borst noted that he expects 2018's film slate to likely be the best ever, with four Marvel films, two Star Wars films and three animated films, with several having large consumer products opportunities. Moreover, the analyst pointed out that ESPN headwinds may abate driven by normalization in NBA costs, with additional upside from stabilization in pay TV subscriptions helped by new virtual multichannel video programming distributor services, and/or traction from the launch of ESPN over the top service. Additionally, Borst said that there are several major new park attractions "on the horizon," noting that he also believes that Disney would potentially benefit the most in the peer group from corporate tax reform. Earlier in the month, RBC Capital analyst Steven Cahall had also upgraded Disney to Outperform, a buy-equivalent rating, on what he called improving sentiment around the stock. Affiliate revenue growth looks set to accelerate on a new round of agreements late in the year, he said, adding that a rotation out of Time Warner (TWX) will also likely be a source of funds for Disney investors.

RISKIER POLITICAL ENVIRONMENT: On January 12, Pivotal Research analyst Brian Wieser downgraded Disney to Sell, while cutting his target on the shares to $86 from $102, citing costs of capital and a riskier political environment after the U.S. election. The analyst told investors in a research note of his own that valuations of companies he covers in the media, advertising, and Internet sector "do not appropriately reflect" that the environment for stocks and companies is riskier now than several months ago. Further, Wieser noted that he is skeptical that conditions have changed enough to warrant changed expectations in the trajectory to near-term or long-term growth rates. Nonetheless, he acknowledged that tax reforms may lead to lower tax rates. In terms of Disney's business operations, Wieser said he was not making any meaningful changes. While he noted that the lack of clarity around the company's CEO succession is another "minor negative" factor, Wieser pointed out that the studio continues to perform "spectacularly well."

PRICE ACTION: In morning trading, shares of Disney are fractionally up to $108.21. Since November 9, 2016, Disney shares have advanced nearly 15%.