TLDR
- Disney stock hit new 52-week highs this week, up 11% in 2025 and outperforming the S&P 500’s 5% gain
- Guggenheim raised price target from $120 to $140, while Jefferies upgraded to Buy with $144 target
- Streaming operations turned profitable in fiscal 2024, with Disney+ contributing to a 50% increase in operating profit
- Theme parks and cruise lines expected to drive future growth with two new cruise ships launching
- Operating income projected to grow 10% next fiscal year after nearly a decade of sluggish performance
Disney stock reached fresh 52-week highs on both Thursday and Friday this week. The entertainment giant has gained 11% so far in 2025, more than doubling the S&P 500’s 5% return.
The momentum continues a strong run that began in early 2024. Disney shares have climbed more than 35% since the start of last year, matching the broader market’s 23% return in 2024.
Two major Wall Street firms boosted their outlook on the stock this week. Guggenheim analyst Michael Morris raised his price target from $120 to $140 while maintaining his buy rating.
Jefferies analyst Ed Alter went further, upgrading Disney from Hold to Buy. He set a new price target of $144, representing potential upside of about 17% from Friday’s close of $122.34.
The analysts point to several factors driving their optimism. Disney’s experiences division, which includes theme parks and cruise lines, shows particular strength.
Parks and Cruises Power Growth
Jefferies expects Disney’s experiences segment to benefit from two new cruise ships launching soon. The firm also sees opportunity from competitor Universal’s Epic Universe theme park in Orlando.
“The Icon of the Seas” which is the world's largest cruise ship, has completed its trial run and will set sail in the Caribbean in January 2024 🎉🤯 pic.twitter.com/cOI5MocWga
— Daily Loud (@DailyLoud) June 29, 2023
Alter believes Epic Universe will eventually become a “traffic tailwind” for Disney. The theory suggests more visitors to central Florida will benefit Disney’s own flagship parks in the region.
Disney’s domestic theme park operations surprised Wall Street with strong performance in recent quarters. The company also announced plans for a new Disney-licensed theme park in Abu Dhabi, funded by the developer.
Morris from Guggenheim highlighted the “refreshing strength” in Disney’s experiences segment. He raised his segment operating income projection to $17.7 billion for the current quarter ending this week.
The experiences division has become increasingly important as Disney navigates challenges in other areas. The company saw disappointing ticket sales for recent releases like Snow White and Pixar’s Elio.
Streaming Turns Corner
Disney’s streaming operations marked a major milestone in fiscal 2024. Disney+ and other streaming services turned profitable halfway through the year, earlier than management expected.
The streaming turnaround has helped boost Disney’s overall profitability. Operating profit increased 50% since the end of fiscal 2023, with earnings from continuing operations rising nearly threefold.
Jefferies projects Disney’s streaming profit margins will climb to 13% by fiscal 2028, up from breakeven currently. The firm expects new content like The Bear, Fantastic Four, Zootopia 2, and Avatar 3 to drive subscriber growth.
Disney recently took full control of Hulu, allowing the company to bundle its streaming platforms more effectively. This move should help maximize profitability across the direct-to-consumer segment.
Revenue growth remains modest, with trailing revenue up just 6% over the past six quarters. However, analysts focus on improving profit margins rather than top-line expansion.
Disney trades at nearly 20 times forward earnings estimates for the fiscal year starting in three months. Wall Street profit projections have been rising following strong quarterly results.
The company has beaten earnings expectations in all but one of its past four quarters. Jefferies forecasts operating profit will grow 10% next fiscal year after nearly a decade of sluggish performance.
Disney stock gained 1.9% in premarket trading Monday following the Jefferies upgrade
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