Wednesday, UBS reaffirmed its Buy rating and $120.00 price target for Walt Disney stock (NYSE:DIS), anticipating positive financial results in the company's first fiscal quarter. Currently trading at $112.14, InvestingPro analysis suggests the stock is slightly undervalued, with analyst targets ranging from $63 to $147. The firm predicts Walt Disney will see growth due to profitability gains in its Direct-to-Consumer (DTC) segment, robust advertising revenue from Sports, and steady trends in Parks, notwithstanding one-time costs related to storms and cruises.
UBS expects that despite the sale of Disney's India assets on November 14, which may complicate year-over-year comparisons, management will offer detailed segment-level disclosures to underscore the underlying trends. With Disney's current annual revenue of $91.36 billion and an overall "GOOD" Financial Health Score from InvestingPro, the firm forecasts a 2% year-over-year increase in total revenues to $24 billion, with earnings before interest and taxes (EBIT) climbing 7% to $4.1 billion. This is projected to lead to a 10% growth in earnings per share (EPS) for the first fiscal quarter.
Looking ahead, UBS projects that Disney's EPS will grow by 7% to $5.40 in fiscal year 2025, with an acceleration to 16% growth to $6.25 in fiscal year 2026. These estimates are based on the assumption of increased profitability in the DTC segment, thanks to the benefits of a price increase and crackdown on password sharing, which are expected to outweigh additional investments in technology. Additionally, improvements in the Parks segment are anticipated, driven by price increases and the introduction of new cruise ships, along with the launch of a flagship ESPN service.
The firm also suggests that the deconsolidation of Disney's India assets and other cost efficiencies could provide further financial upside as the year advances. UBS's analysis indicates a positive outlook for Walt Disney's financial performance, with various strategic initiatives poised to contribute to the company's revenue and profit growth.
In other recent news, The Walt Disney Company has announced a strategic reshuffle of its executive team, aligning with ambitious expansion plans for its cruise line and global theme parks. The company has also reinstated its Buy rating with Citi, which expects Disney's earnings per share (EPS) to experience high single-digit growth in fiscal year 2025 and double-digit growth in subsequent years.
Disney has also entered a merger with FuboTV (NYSE:FUBO), integrating Disney's Hulu + Live TV service with FuboTV. The combined entity, in which Disney will hold a 70% stake, is expected to bring together over 6.2 million subscribers from North America and launch a Sports & Broadcast service featuring Disney's top sports and broadcast networks.
Disney has scheduled a new animated feature film for the popular series Bluey for release in 2027. The movie will be streamed on Disney+ following its global theatrical release.
Analyst firms have been active in reviewing Disney's performance. Redburn-Atlantic upgraded Disney's stock from Neutral to Buy, significantly raising the price target from $100.00 to $147.00. Rosenblatt Securities also upgraded Disney's stock price target, maintaining a Buy rating due to confidence in Disney's growth potential. Meanwhile, Jefferies initiated coverage on Disney stock with a Hold rating, highlighting strong momentum for Disney's direct-to-consumer business and an anticipated recovery in the Parks segment's operating income growth.
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