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Investing.com -- Jefferies in a note dated Monday has upgraded its rating on The Walt Disney Company (NYSE:DIS) to “buy” from “hold” and raised its price target to $144 from $100, citing stronger confidence in Disney’s earnings growth outlook and a more favorable setup across key business segments.
The revised target price represents a 19% upside from Disney’s prior closing price of $121.46 and is based on a 20x multiple of the brokerage’s projected FY27 adjusted earnings per share of $7.20.
Jefferies analysts stated that while Disney’s operating income had stagnated from 2016 through 2024, several structural improvements now support renewed growth.
These include margin expansion in its direct-to-consumer (DTC) segment, improving trends in its parks and cruise business, and a promising content and sports slate.
In particular, Jefferies flagged a reduced risk of a slowdown in the company’s Parks segment in the second half of 2025, a concern that had been tied to macroeconomic factors and competition from Universal’s Epic Universe.
Updated data on Disney World bookings showed forward growth of +4% in fiscal third quarter and +7% in fiscal fourth quarter, which supported management’s earlier commentary and reduced the firm’s caution on this issue.
Jefferies estimates that the launch of two new cruise ships in fiscal 2026-Disney Destiny and Disney Adventure-will contribute over $1 billion in additional revenue annually.
The analysis assumes high occupancy rates and uses Norwegian Cruise Line (NYSE:NCLH) as a comparable benchmark.
Based on these projections, the cruise business could account for roughly 30% of the expected growth in operating income within the Experiences segment in FY26.
The brokerage also expects DTC to shift from being a drag on operating income in recent years to becoming a major contributor.
Jefferies estimates DTC margins will grow from just 0.6% in FY24 to more than 13% by FY28, driven by bundling strategies, stronger content offerings, and increased ad revenue, helped by partnerships with Amazon (NASDAQ:AMZN) and other digital platforms.
Disney+ web traffic has grown by over 40% each of the past three months year-over-year. The content pipeline was another point of optimism, with upcoming releases such as Zootopia 2, Avatar 3, and the ESPN standalone streaming launch expected to boost both user engagement and advertising revenue. Jefferies expects these efforts to lead to an adjusted earnings growth of 11% in FY27.