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Investing.com -- Guggenheim raised its price target on Walt Disney (NYSE:DIS) Co to $140 from $120 on stronger-than-expected trends across sports advertising, theme parks, and progress on cost-cutting as the company pushes toward a more unified streaming strategy.
The brokerage maintained its Buy rating and now expects Disney’s segment operating income to reach $17.7 billion in fiscal 2024, slightly ahead of consensus at $17.65 billion.
That includes a lift in fiscal third-quarter operating income to $4.5 billion from a previous $4.4 billion forecast.
Guggenheim said its updated model reflects better profitability in Disney’s Linear Networks business after the Star India exit, higher-margin sports ad revenue during the seven-game NBA Finals, and more resilient park attendance and travel trends than previously forecast.
While recent films like Elio and Thunderbolts underperformed at the box office, the impact was partly offset by stronger expectations for the Lilo & Stitch remake.
Content licensing and theatrical revenue was trimmed, but Disney’s direct-to-consumer (DTC) earnings forecast was unchanged and remained above Wall Street estimates.
On the Sports side, the firm noted an increase in total viewership for the NBA Finals despite lower ratings per game. That pushed ad revenue estimates up, helping segment operating income reach $1 billion.
Theme park demand remained solid, with Guggenheim citing improving app engagement trends for both domestic and international parks.
Daily downloads declined less sharply in the U.S. and returned to growth overseas in the June quarter, according to the note.
Guggenheim said Disney’s full control of Hulu and the upcoming ESPN streaming launch set the stage for more aggressive bundling, positioning the company well to grow digital revenues amid a shift away from traditional TV.
The firm’s new price target is based on a 23.8x multiple of 2025 earnings, reflecting confidence in long-term growth in digital and parks operations.