On Friday, TD Cowen adjusted its outlook on Walt Disney shares (NYSE: NYSE:DIS), increasing the price target to $123.00 from the previous $108.00 while maintaining a Hold rating on the stock. The firm's decision came after Disney's Fiscal Quarter 4 earnings before interest and taxes (EBIT) slightly missed TD Cowen's estimates but matched the broader market consensus.
The company's management provided an unexpected three-year earnings per share (EPS) forecast, predicting a high single-digit percentage increase for fiscal year 2025 and a double-digit percentage rise for both fiscal years 2026 and 2027. In response to this guidance, TD Cowen has revised its EPS projections upward for the mentioned fiscal years.
The revised price target of $123.00 is based on a 14 times multiple of the estimated EBITDA for fiscal year 2025. The analyst from TD Cowen emphasized the rationale behind the price target adjustment, stating that the new target reflects the updated earnings estimates.
Despite the increase in the price target, TD Cowen reiterated its Hold rating on Disney stock. The Hold rating suggests that the firm does not currently recommend either buying or selling the shares but is rather advising investors to maintain their current positions in the stock. The analyst's comment concluded with a reiteration of the Hold rating, indicating a stance of caution or neutrality regarding Disney's stock performance.
In other recent news, Walt Disney has been the subject of numerous financial research firms' attention. Following the company's fourth-quarter earnings report for 2024, Guggenheim maintained a Buy rating on Disney's shares, increasing the price target from $110 to $130. The firm's upgrade was based on Disney's robust earnings per share (EPS) outlook and stronger performance in their Direct-to-Consumer (DTC) segment.
Disney's financial guidance for fiscal year 2025 anticipates EPS growth surpassing consensus and projects a shift to double-digit growth in the subsequent years. The company's Experiences segment is expected to see a 6-8% rise in operating income in fiscal year 2025, significantly higher than the previous consensus of less than 1% growth.
Analysts from Morgan Stanley (NYSE:MS), Loop Capital, Macquarie, Bernstein, and Deutsche Bank (ETR:DBKGn) have also adjusted their outlooks on Disney, citing the company's growth plan driven by a content turnaround and increased experiential investments. They anticipate high single-digit adjusted EPS growth in fiscal 2025, and double-digit growth in 2026 and 2027.
However, Disney's first quarter of 2025 is expected to see a decline in Disney+ subscriptions and Parks performance. Despite these near-term risks and valuation concerns, analysts express confidence in Disney's strategic moves and potential for sustained growth, especially in the Direct-to-Consumer business.
InvestingPro Insights
Recent data from InvestingPro adds valuable context to TD Cowen's analysis of Walt Disney (NYSE: DIS). The company's market capitalization stands at $204.67 billion, reflecting its significant presence in the entertainment industry. Disney's P/E ratio of 41.49 indicates that investors are willing to pay a premium for the stock, possibly due to growth expectations aligned with management's optimistic three-year EPS forecast.
InvestingPro Tips highlight Disney's strong recent performance, with a 15.81% price return over the past month and a 22.9% return over the last three months. This aligns with TD Cowen's increased price target and the market's positive reaction to Disney's forward-looking guidance. Additionally, an InvestingPro Tip notes that Disney is trading at a low P/E ratio relative to near-term earnings growth, which could support the potential for further stock appreciation.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Disney, providing a deeper understanding of the company's financial health and market position.
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