Another Wall Street firm sees progress in Disney ‘s turnaround. The news Evercore ISI raised its Disney price target to $134 per share from $128, implying more than 16.5% upside from Friday’s close. The analysts kept their buy-equivalent outperform rating on the stock. Shares of Disney fell 1% to just below $114 each Monday — their first down day in 10 sessions. That winning streak included Thursday’s 6.2% post-earnings rally followed by a 5.5% gain on Friday. Disney beat on adjusted earnings per share and revenue in its fiscal fourth quarter. For fiscal 2024, adjusted EPS grew 32% year-over-year to $4.97. The company also provided a robust long-term outlook — calling for high single-digit EPS growth on a percentage basis in fiscal 2025 and double-digit growth in fiscal 2026 and 2027. Analysts at Evercore took that guidance and projected a path to full-year EPS of $7 in fiscal 2027 — driven by improved profitability in streaming, a rebound in theme parks, and a more defined ESPN strategy. Disney has not earned that much in a single year since fiscal 2018 due to years of steep streaming costs, setbacks from the Covid-19 pandemic, and Hollywood strikes. Big picture Evercore’s Disney price target bump Monday joins a string of analyst PT hikes last week following strong earnings. The recent run in Disney stock is reflective of renewed confidence in management’s ability to get its financial house in order. The company’s cash management and aggressive cost-cutting measures finally are bearing fruit. Profitability in streaming being on track and a better slate of movies at the box office are also playing a part. On the post-earnings conference call, Disney CEO Bob Iger said, “A successful Disney movie today drives more value than it ever has in the past,” with an increased number of consumer touch points including streaming, parks and resorts, cruise ships, consumer products, and games. “This multiplier effect means that the system economics of our movie business has never been stronger,” Iger added. Bottom line Jim Cramer has not been feeling confident about media stocks as companies are trying to figure out how to “stay alive” in a streaming-focused world. However, he still likes Disney because of its core strengths in movies, streaming, and theme parks, which create an ecosystem that makes the products and services of each more valuable together. “Be aware the [media] group has a very big overhang. But would I trade out of Disney? No, because Disney is changing the entire narrative. That’s what matters to me,” Jim said on Monday’s Morning Meeting. Despite Disney’s recent rally, we believe there’s plenty of upside ahead. We have a buy-equivalent 1 rating on the stock and a $130-per-share price target. The next big streaming target is for Disney’s entertainment direct-to-consumer business to achieve 10% operating margin in fiscal 2026. The more money Disney makes in DTC, the less worried investors will be about the shrinking profits of its traditional media business. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Mickey and Minnie Mouse pose during Jollywood Nights.
Disney
Another Wall Street firm sees progress in Disney‘s turnaround.
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