BofA Securities has adjusted its outlook for Walt Disney Co (NYSE: DIS), reducing the entertainment giant's price target from $145.00 to $120.00 while maintaining a Buy rating on the stock.
The revision reflects a change in the price-to-earnings multiple to approximately 22 times, down from the previous 23 times, based on the updated calendar year 2025 earnings per share estimate.
The adjustment by BofA Securities is attributed to a moderated growth forecast for Disney's theme parks in the near term. Nonetheless, the firm recognizes Disney's robust portfolio of premier assets, including its content and intellectual property, as well as its theme parks, which continue to hold significant value.
The analyst from BofA Securities highlighted three potential near-term catalysts for Disney: an anticipated profitability inflection point in its direct-to-consumer (DTC) segment, an improvement in the company's film slate, and expected advancements in advertising revenue.
The Walt Disney Company (NYSE:DIS) reported a modest 2% revenue growth in the third quarter of 2024, largely driven by strong demand for its theme parks. Despite flat attendance, the company is seeing increased spending per capita.
However, Loop Capital adjusted its price target for Disney shares, bringing it down to $120 from the previous $130, while keeping a Buy rating on the stock, following Disney's financial update which included mixed results across its various divisions. The firm's analyst anticipates a return to growth for Disney's parks late next year or in fiscal year 2026.
Disney's direct-to-consumer (DTC) business turned a profit, with Disney+ continuing to show promising growth, and plans to expand its content to include news and sports. The company is investing heavily in sports, scripted TV, and movies to bolster its streaming platform, aiming to achieve double-digit margins. Furthermore, Disney is planning to incur pre-opening costs for new cruise ships in fiscal years 2024 and 2025, indicating a focus on expanding its Experiences business.
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