Loop Capital has adjusted its price target for Walt Disney Company (NYSE: NYSE:DIS) shares, bringing it down to $120 from the previous $130, while keeping a Buy rating on the stock.
The revision follows Disney's financial update, which included mixed results across its various divisions. The entertainment segment performed better than expected, and the direct-to-consumer (DTC) business turned a profit.
However, the company's parks division did not meet expectations, prompting management to reduce the fourth-quarter guidance for the Experiences division.
Disney's management also indicated that the domestic parks business might experience softer performance in the coming quarters. Despite this, the company has increased its full-year earnings per share (EPS) growth forecast to 30% from the earlier projection of 25%. Following the announcement, Disney's stock price fell by 4.5% and is currently at its lowest point for the year.
Loop Capital has updated its financial estimates for Disney, slightly raising the EPS estimate for fiscal year 2024 by five cents, while reducing the forecast for fiscal year 2025 by 16 cents.
The firm's analyst believes the current stock price reflects the challenges faced by the parks division. Loop Capital anticipates a return to growth for Disney's parks late next year or in fiscal year 2026.
The analyst also highlighted the potential for Disney's DTC business, projecting it could add $2.5 billion in profits in the next few years. Additionally, the content business is expected to have the potential to generate earnings of at least $1 billion.
Despite the lowered price target, Loop Capital maintains its Buy rating, suggesting confidence in Disney's long-term prospects.
Disney's streaming service, Disney+, continues to show promising growth, with 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.
InvestingPro Insights
In light of Loop Capital's adjustment of Disney's price target, current data from InvestingPro provides a broader financial context for investors considering DIS stock. With a market capitalization of $156.1 billion and a P/E ratio of 32.93, Disney is trading at a relatively high earnings multiple, which could signal investor confidence in its future growth despite recent setbacks. This is further supported by the fact that analysts have revised their earnings upwards for the upcoming period, indicating optimism about Disney's profitability.
InvestingPro Tips for Disney reveal that the company is expected to grow its net income this year and remains a prominent player in the Entertainment industry. Notably, the stock is currently in oversold territory according to the RSI, which might interest investors looking for potential entry points. Moreover, Disney's stock has historically shown low price volatility, which could appeal to investors seeking stability.
For those interested in diving deeper into Disney's financial health, InvestingPro offers additional tips. Currently, there are 9 more InvestingPro Tips available for Disney, which can be found at https://www.investing.com/pro/DIS. These tips can provide investors with further insights into Disney's performance and potential investment opportunities.
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