Investors often feel like they better pay attention to a stock in the Dow Jones Industrial Average if it is up 10% in a single day. But what about when it is The Walt Disney Company (NYSE: DIS) experiencing a one-day surge? After all, it has been in the investor penalty box for quite some time.
Strategic investors have felt snubbed by Walt Disney in recent years. What used to be almost a guaranteed win had reversed into several years of disappointment and a total lack of performance. Its stock has now just risen by 10.7% to $102.02 in a single trading day, but this is still at the halfway mark of its 52-week range and is still barely half of its $190+ highs back in 2021.
Disney has had a habit of posting spotty earnings. It seemed to either be sports, or movies, or theme park revenues or streaming that was a problem. But now we have a single earnings report driving Walt Disney shares for both revenues and earnings per share — and Disney even guided up its Disney+ subscriber growth expectations for streaming. And if this wasn’t enough to help out, Disney even announced plans to open a new theme park and resort in Abu Dhabi.
The company had previously issued a forecast that Disney+ would likely lose subscribers this last quarter. Instead, it added 1.4 million Disney+ streaming subscriptions. This service now streams to 126 million subscribers globally — and the company also now sees a modest rise to that streaming base in the current as well.
While revenues of $23.6 billion (up 7%) beat the $23.1 billion consensus estimate, the earnings beat of $1.45 EPS being a full $0.25 per share higher was even more impressive. The company attributed higher prices and a larger number of subscribers. And now Disney’s forecast of $5.75 EPS for this fiscal year is up 16% rather than prior expectations of just under 10%.
Those looking for a gain in entertainment were correct as revenues rose 9% to $10.68 billion. Disney’s revenue in sports also rose 5% to $4.53 billion because of strong advertising, additional college football playoff games and due to an extra NFL game. Sports is now forecast to rise 18% rather than 13%.
Disney’s experiences segment (parks, resorts and cruise line) saw its revenue rise by 6% to $8.89 billion. That was driven by domestic growth — domestic theme park sales rose 9% to $6.5 billion even as international theme park sales fell 5% to $1.44 billion. Disney also talked up higher volume revenues from a new cruise ship launch as well.
Many long-term investors are still buried in Disney from prior highs and the stock is not remarkably higher than it was in 2015. But as noted earlier, the stock is still just over half of its 2021 peak. And at the moment, it has a whole new Star Wars theme, a new park in Abu Dhabi, stronger streaming, more opportunities in cruises and destinations and a thriving sports franchise.
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The real kicker for Disney after an increase in guidance and beating expectations is that Wall Street analysts are likely to feel comfortable increasing their longer-term views on earnings per share. If $5.75 EPS is the new target for 2025, then the $6.00-ish consensus for 2026 has room for upside as well. That leaves open the opportunity for analysts to begin thinking $8.00 in earnings per share in forward years — and that puts strategic investors in a spot where they may only be paying twelve times future earnings.
After earnings targets get raised, that leaves strategic investors looking for cheap dividend growth plays. Disney’s annual dividend of $1.00 per share at the end of 2024 was 33% higher than in 2023. The company referred to itself as “operating from a renewed position of strength” and that was nearly six months before this latest bit of good news.
Strategic investors can be long-term investors as well. Some of those investors who have longer views than just 2025, and the tariffs and international spats that are coming with them, are likely to think that Disney’s days of despair may finally be in the rearview mirror.
Walt Disney’s stock briefly dipped below $82 in April, but its 52-week range is $80.10 to $118.63. On a longer-term basis and outside of the stock relative to the past is whether Disney’s market cap of $184 billion can also nearly double over time. That remains to be seen but the post-earnings trading action looks like a positive start for long-term strategic investors who want value, dividend growth and rising earnings.
UPDATED ANALYST DATA
As expected, several firms on Wall Street have upgraded their price targets after Disney’s positive quarter:
- Barclays reiterated its Overweight rating and raised its price target to $120 from $115.
- Loop Capital reiterated Buy and raised its price target to $125 from $120.
- Morgan Stanley reiterated Overweight and raised its price target to $120 from $110.
- UBS reiterated its Buy rating and raised its price target to $120 from $105.
Elsewhere, BofA reiterated is Buy rating and kept its $140 price target in place. The firm has also raised its earnings expectations and sees $6.40 EPS in 2026 and $7.12 EPS in 2027. BofA sees several reasons for Walt Disney to outperform in 2025:
- recent price increases across Disney+/Hulu/ESPN+
- profitability inflection in direct-to-consumer
- improving theme park/cruise trends with several levers for future growth
- strong advertiser demand for the ad-supported tier on Disney+
