Disney Receives Strong Buy Rating and Price Target Increase Ahead of Q2 Earnings

Deutsche Bank's Bryan Kraft raised their price target on Disney (NYSE: DIS) by 4% from $125 to $130 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

A day ahead of the release of Disney's Q2 2024 earnings report, Kraft hiked their "operating income estimates to reflect Parks, Sport and Studio, partially offset by lowered DTC numbers." This adjustment suggests that Kraft anticipates positive performance in Disney's Parks, Sport, and Studio divisions, while expecting slightly lower numbers in the Direct-to-Consumer (DTC) segment.

Acknowledging that the "stock doesn't offer tremendous upside unless there is further multiple expansion," Kraft argues that "Disney can maintain its current price-to-earnings multiple and carry it forward to 2025 estimates as the year progresses on the back of strong earnings growth." This assessment indicates Kraft's belief that Disney's current valuation is reasonable, but the stock may need multiple expansion to deliver substantial returns.

In a separate update on May 6, Loop Capital's Alan Gould also issued an optimistic outlook on Disney. Gould raised their price target by 23.9%, from $113 to $140, and maintained their Strong Buy rating on the stock. This significant increase in the price target suggests that Gould expects Disney's stock price to experience considerable growth in the future.

It is worth noting that 100% of top-rated analysts currently rate Disney as a Strong Buy or Buy, with no analysts considering it a Hold or recommending selling the stock. This consensus among analysts reflects a positive sentiment towards Disney's prospects.

The consensus forecast among analysts is that Disney's upcoming year will deliver earnings per share (EPS) of $2.58. If these predictions hold true, Disney's next yearly EPS will see a substantial increase of 57.2% on a year-over-year basis. This projection indicates a strong earnings growth trajectory for the company.

In terms of stock performance, Disney has seen a 13.1% increase year-over-year. However, during the same period, Disney has trailed behind the broader market as the S&P 500 has experienced a more significant gain of 25.2%.

Deutsche Bank analyst Bryan Kraft, who issued the recent price target increase, is ranked by WallStreetZen in the top 25% out of 4,575 Wall Street analysts. Kraft specializes in the Real Estate, Communication Services, and Technology sectors and has an average return of 2% and a 51.5% win rate. This ranking and expertise add further credibility to Kraft's analysis and recommendations.

The Walt Disney Company, founded in 1923 and headquartered in Burbank, CA, is a renowned mass media and entertainment conglomerate. Disney is best known for its film studio, Walt Disney Studios, and owns and operates various divisions, including the ABC broadcast network, cable television networks, publishing, merchandising, music, and theater. Additionally, Disney offers direct-to-consumer streaming services such as Disney+, Star+, ESPN+, and Hulu.

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