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On Tuesday, UBS analyst John Hodulik revised the price target for Walt Disney (NYSE:DIS) shares, reducing it to $105.00 from the previous $130.00, while continuing to endorse the stock with a Buy rating. The stock, currently trading at $85.34 and near its 52-week low of $80.10, appears undervalued according to InvestingPro analysis. Hodulik’s reassessment comes amid growing macroeconomic uncertainties, prompting a cautious revision of forecasts for Disney’s most sensitive revenue streams, notably advertising and Parks.
In his analysis, Hodulik anticipates that Disney’s second fiscal quarter (F2Q) results will showcase robust demand within the Parks division, benefits from the launch of a new cruise ship, and strong sports advertising performance. He predicts that these factors will contribute to a 4.2% year-over-year increase in total revenues, reaching $23 billion, and a 5.6% rise in EBIT to $4.1 billion, which would result in a 1.6% growth in earnings per share (EPS). This growth trajectory aligns with Disney’s current annual revenue of $92.5 billion and overall GOOD Financial Health Score from InvestingPro.
Despite the adjustments, the analyst expects Disney to maintain its EPS guidance, buoyed by a solid year-to-date showing. The revised projections include a first-half EPS growth of 23%, in line with the company’s annual high single-digit (HSD) growth target. Hodulik’s estimates for Disney’s EPS stand at $5.51 for the full year, marking an increase of 9.5%. InvestingPro data shows the company’s strong fundamentals, with analysts forecasting EPS of $5.43 for FY2025. Get access to 8 more exclusive ProTips and comprehensive valuation metrics with InvestingPro’s detailed research report.
Looking further ahead, Hodulik has set new expectations for Disney’s financial performance, with a forecasted EPS of $6.06 for fiscal year 2026 (F26E), down from the prior estimate of $6.39, and $7.29 for fiscal year 2027 (F27), adjusted from $7.80. These projections are based on continuous improvements in direct-to-consumer (DTC) profitability, renewed growth in the Sports segment, and a more adaptable and variable cost structure in the Parks segment, which is expected to be more resilient compared to previous economic downturns. With a market capitalization of $155 billion and moderate debt levels, Hodulik concludes that this will result in a compound annual growth rate (CAGR) of 13% for Disney’s EPS.
In other recent news, Walt Disney Company has been the focus of several significant developments. Analysts from BofA Securities and Goldman Sachs have maintained a Buy rating on Disney shares, both setting a price target of $140. BofA Securities anticipates improved operating income in Disney’s Experiences segment in the latter quarters of fiscal 2025, driven by factors like the Paris Olympics and a new cruise ship. Meanwhile, Goldman Sachs projects Disney’s second fiscal quarter 2025 earnings per share to be $1.18, with revenues expected to reach $23.1 billion.
Bernstein analysts reiterated an Outperform rating with a $120 target, highlighting potential margin expansion in Disney’s Direct-to-Consumer segment and projecting earnings per share to exceed $6 by fiscal year 2026. The Federal Communications Commission has opened an investigation into Disney’s diversity practices, questioning whether they comply with U.S. equal employment opportunity regulations. Additionally, Disney’s sports segment is expected to incur increased expenses, partially due to the timing of sports costs and a write-off from the Venu venture. These developments come amid broader macroeconomic concerns and a focus on Disney’s strategic business segments and market conditions.
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