On Wednesday, Citi analysts reinstated coverage of Walt Disney Company (NYSE:DIS) stock with a Buy rating and set a price target of $125. The firm had previously suspended its rating for the media and entertainment conglomerate but now sees a favorable risk-reward scenario for investors at current stock prices of $108.70.
According to InvestingPro data, Disney, with its substantial $196.85 billion market cap, is currently trading below its Fair Value, suggesting potential upside opportunity.
Citi expects Disney to achieve its adjusted earnings per share (EPS) guidance, which anticipates high single-digit growth in fiscal year (FY) 2025 and double-digit growth in the subsequent years. The analysts' projections align with the company's outlook, with an estimated 8% increase in FY 2025 and around 11% and 13% in FY 2026 and FY 2027, respectively. InvestingPro analysis reveals two key insights: Disney is trading at a low P/E ratio relative to its near-term earnings growth, and the stock generally trades with low price volatility.
While Citi's adjusted EPS estimate for FY 2025 is approximately 2% below the consensus on Wall Street, and their FY 2026 estimate is around 4% lower, the analysts believe the current stock levels present more potential for gain than loss. They note a downside risk of $13 and an upside of $25 per share.
In their bear case scenario, Citi analysts assume that economic weakness could result in earnings headwinds at half the level experienced during the Global Financial Crisis, with Disney shares trading at 19 times the 2026 earnings, leading to an equity value of $96 per share. Conversely, the bull case scenario assumes higher than anticipated direct-to-consumer (DTC) average revenue per user (ARPU), less severe domestic cord-cutting, and the market valuing Disney at 22 times the 2026 earnings, which would imply an equity value of $134 per share.
Citi's decision to resume coverage with a Buy rating and a $125 target price reflects their view that the stock trades at approximately 21 times the projected FY 2026 EPS, underlining their confidence in Disney's growth prospects. With a current P/E ratio of 40.01 and trailing twelve-month revenue of $91.36 billion, Disney maintains its position as a prominent entertainment industry player. Discover the complete financial story with InvestingPro's detailed Research Report, part of their coverage of over 1,400 US stocks, offering professional-grade analysis and actionable insights.
In other recent news, Walt Disney has been making substantial progress in its business operations. The entertainment giant recently announced a merger with FuboTV (NYSE:FUBO), combining Disney's Hulu + Live TV service with FuboTV. The merged entity, which will continue to operate under the Fubo name, will be 70% owned by Disney. This merger 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 also announced a new animated feature film for the popular series Bluey, scheduled for release in 2027. The movie will be streamed on Disney+ following its global theatrical release. The film promises to deliver the same charm and humor that made the television series globally popular.
On the analysts' front, Disney's stock was upgraded by Redburn-Atlantic from Neutral to Buy, significantly raising the price target from $100.00 to $147.00, reflecting the firm's confidence in Disney's transition from traditional linear TV to a more profitable streaming model. Rosenblatt Securities recently 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. These are some of the recent developments in Disney's business operations and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.