Optimistic Outlook for Disney’s Earnings and Growth Across Segments

Wells Fargo analyst Steven Cahall maintained a Buy rating on Walt Disney (DIS – Research Report) today and set a price target of $136.00.

Steven Cahall has given his Buy rating due to a combination of factors surrounding The Walt Disney Company’s financial outlook and operational performance. Cahall’s positive stance is significantly influenced by Disney’s adjusted earnings per share (EPS) for the third fiscal quarter of 2024, which he forecasts to be 8% higher than the consensus due to strong performance in Theatrical releases and Sports. Additionally, his outlook on Disney’s Parks and Experiences segment is optimistic, as he anticipates modest growth in Domestic Parks attendance, per capita spending, and hotel occupancy, despite flat operating income after accounting for wage inflation. Furthermore, Cahall expects the Cruises sub-segment to contribute increasingly to the segment’s revenue and operating income, especially with the planned expansion of Disney’s cruise ship fleet by FY27.

Cahall also underscores the potential in Disney’s direct-to-consumer (DTC) services, maintaining his views on segment operating income loss in F3Q’24 but projecting improvement and profitability in subsequent quarters. He anticipates pricing power for Disney+ and improvement in subscription trends, driven by strong content offerings. His report suggests that Disney management may be addressing investor concerns and potentially considering share buybacks, which could positively influence earnings per share growth. Overall, Cahall’s forecasted out-year DTC operating income is ahead of consensus, and he believes that FY25 will be pivotal for Disney’s Sports segment, with the launch of ESPN’s flagship DTC service. These factors contribute to his maintenance of a $136 target price for Disney’s stock.

According to TipRanks, Cahall is a 4-star analyst with an average return of 3.4% and a 51.90% success rate. Cahall covers the Communication Services sector, focusing on stocks such as Paramount Global Class B, Walt Disney, and Charter Communications.

In another report released yesterday, Goldman Sachs also initiated coverage with a Buy rating on the stock with a $125.00 price target.

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Walt Disney (DIS) Company Description:

The Walt Disney Co. is a diversified entertainment and media enterprise. It operates through the following segments: Media Networks, Parks, Experiences and Products, Studio Entertainment and Direct-to-Consumer & International (DTCI).
The company owns domestic cable networks like Disney, ESPN, Freeform and National Geographic, is involved in the production and distribution of television and motion picture content, operates theme parks, resorts, cruise lines and also offers streaming services.
Founded by Walter Elias Disney on October 16, 1923, the company is headquartered in Burbank, CA.