Barclays Analyst Lowers Disney's Price Target, Maintains Strong Buy Rating

Barclays's Kannan Venkateshwar lowered their price target on Disney (NYSE: DIS) by 3.7% from $135 to $130 on May 8th, 2024. The analyst maintained their Strong Buy rating on the stock.

In their report, Venkateshwar addressed concerns about Disney's theme park operating income growth and highlighted that these concerns may overlook some of the underlying factors behind the company's guidance framework. The analyst also noted that the sell-off in Disney's stock following the release of their Q2 2024 earnings was overdone.

Speaking of earnings, Disney reported impressive results for the second quarter of 2024. The company's earnings per share (EPS) of $1.21 surpassed the Zacks Consensus Estimate of $1.12 and represented a 30.1% increase compared to Q1 2023's EPS of $0.93. Additionally, Disney's revenue for Q2 2024 amounted to $22.08 billion, slightly missing the Zacks Consensus Estimate by 0.23% but surpassing the previous year's Q1 revenue of $21.82 billion by 1.2%.

The company also demonstrated its commitment to shareholders by repurchasing $1 billion in stock and declaring a $0.45 dividend, which represented a 50% increase from the previous quarter's dividend. Looking ahead, Disney's management provided guidance for FY 2024, including a projected 25% EPS growth, up from the previous guidance of 20% growth. The company also expects to achieve free cash flow of $8 billion and surpass the $7.5 billion annualized cost target. Furthermore, Disney plans to buy back $3 billion in stock by the end of the fiscal year.

Disney's CEO, Bob Iger, expressed satisfaction with the company's performance in Q2 2024, highlighting the strong growth in their Experiences segment and streaming business. Iger also emphasized the profitability of the entertainment streaming division, stating that the company remains on track to achieve profitability in their combined streaming businesses by Q4. He outlined various growth initiatives, including highly anticipated theatrical releases, successful television shows, and ESPN's evolution into a leading digital sports platform. Iger concluded by emphasizing the positive results of the turnaround and growth initiatives initiated by Disney last year.

Following Venkateshwar's rating update, other analysts also revised their outlook on Disney on May 8th, 2024. Vijay Jayant from Evercore ISI Group lowered their price target by 1.5% from $130 to $128 but maintained a Buy rating on the stock. Similarly, John Hodulik from UBS lowered their price target by 7.1% from $140 to $130 and also maintained a Strong Buy rating.

It is worth noting that all top-rated analysts currently view Disney as a Strong Buy or Buy, with no analysts recommending a Hold rating or suggesting selling the stock. The consensus forecast among analysts is that Disney will deliver earnings per share (EPS) of $1.76 for the upcoming year, representing an 89.1% increase on a year-over-year basis.

Looking at the company's stock performance, Disney's share price has remained relatively unchanged since the release of their Q2 2024 earnings on May 7th, 2024. However, when comparing the stock's performance year-over-year, Disney has seen a 2.4% increase, trailing behind the S&P 500, which has experienced a 25.4% rise during the same period.

Barclays analyst Kannan Venkateshwar is ranked in the top 26% of Wall Street analysts by WallStreetZen, with an average return of 2.9% and a win rate of 51.6%. Specializing in sectors such as Consumer Defensive and Industrials, Venkateshwar's rating update carries weight within the financial community.

The Walt Disney Company, founded in 1923 and headquartered in Burbank, CA, is a renowned mass media and entertainment conglomerate. With its film studio, Walt Disney Studios, Disney also operates the ABC broadcast network, cable television networks, publishing, merchandising, music, and theater divisions. Additionally, the company has made a name for itself in the direct-to-consumer streaming services market, with platforms like Disney+, Star+, ESPN+, and Hulu.

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