On Friday, Guggenheim maintained a Buy rating on Walt Disney (NYSE: NYSE:DIS) shares and increased the price target to $130 from $110. The adjustment follows Disney's fourth-quarter earnings for 2024, which were consistent with expectations, showing a stronger performance in their Direct-to-Consumer (DTC) segment and weaker results in Linear Networks.
The firm highlighted Disney's comprehensive multi-year financial guidance, which anticipates earnings per share (EPS) growth surpassing the consensus for fiscal year 2025 and projects a shift to double-digit growth in the following two years.
The new financial outlook from Disney includes an operating income growth forecast for its Experiences segment, predicting a 6-8% rise in fiscal year 2025. This projection takes into account the costs associated with the launch of a new cruise ship and the impact of recent hurricanes. Previously, the consensus for this segment's growth was less than 1%.
The guidance also accounts for the expected competition stemming from the opening of Comcast (NASDAQ:CMCSA)'s new theme park in Orlando in May 2025. Disney's management remains optimistic, noting strong bookings for the second half of 2025.
In addition to the Experiences segment, Disney's management foresees substantial profit growth over the next two years in the Entertainment division. This growth is expected to be driven by DTC and Studio content, which should significantly counterbalance ongoing pressures in the Linear segment.
Furthermore, the core Sports area, excluding STAR, is projected to return to modest growth in fiscal year 2026, bolstered by a full year of flagship ESPN streaming service operations set to launch in the fall of 2025.
Guggenheim's revised price target reflects the comprehensive and positive financial guidance provided by Disney. The firm's analysts believe that the entertainment giant's strategic plans, especially in the DTC and Studio content areas, will lead to sustained profit growth and a robust EPS outlook, justifying the Buy rating and the uplifted price target for the company's shares.
In other recent news, Walt Disney has been the focus of several major financial research firms, including Morgan Stanley (NYSE:MS), Loop Capital, Macquarie, Bernstein, and Deutsche Bank (ETR:DBKGn), all of which have adjusted their outlooks on the company.
The primary highlights from these revisions include anticipated high single-digit adjusted EPS growth in fiscal 2025, and double-digit growth in 2026 and 2027. Disney's Experiences segment is also projected to see a 6-8% growth in operating income.
Further, Disney's content divisions have celebrated a record 60 Emmy Awards and box office hits such as 'Inside Out 2' and 'Deadpool & Wolverine'. Moreover, Disney+'s subscriber count has reached a significant milestone of 174 million. These recent developments reflect the company's strategic direction and potential to drive shareholder value.
Morgan Stanley, Loop Capital, and Bernstein have all increased their price targets for Disney to $125, citing the company's growth plan driven by a content turnaround and increased experiential investments. Macquarie, while maintaining a neutral stance, has adjusted its price target from $91.00 to $110.00. Deutsche Bank has also increased its price target to $131, maintaining a positive rating.
On the other hand, Disney's first quarter of 2025 is expected to see a decline in Disney+ subscriptions and Parks performance. Despite these near-term risks and valuation concerns, analysts express confidence in Disney's strategic moves and potential for sustained growth, particularly in the Direct-to-Consumer business. These are recent developments in the company's performance and future outlook.
InvestingPro Insights
Recent data from InvestingPro adds further context to Disney's financial outlook. The company's market capitalization stands at $198.16 billion, reflecting its significant position in the entertainment industry. Disney's revenue for the last twelve months reached $91.36 billion, with a modest growth of 2.77%. This aligns with the company's guidance on future growth, particularly in its Experiences and Entertainment divisions.
InvestingPro Tips highlight Disney's strong recent performance, with a 22.9% price total return over the last three months and a 15.81% return in the past month. This positive momentum supports Guggenheim's optimistic outlook and increased price target. Additionally, analysts predict the company will be profitable this year, which is consistent with Disney's projections for EPS growth.
It's worth noting that Disney is trading at a P/E ratio of 37.76, which may seem high at first glance. However, an InvestingPro Tip suggests that this P/E ratio is actually low relative to near-term earnings growth, potentially indicating an attractive valuation given the company's growth prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Disney, providing a deeper understanding of the company's financial health and market position.
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