On Tuesday, TD Cowen maintained its Hold rating on Walt Disney (NYSE: NYSE:DIS) shares but increased the price target from $100 to $108, following the company’s reported fiscal second-quarter results which surpassed estimates.
The firm also noted that Disney raised its fiscal year 2024 earnings per share (EPS) guidance from $4.60 to $4.70, despite some cautious remarks about the third fiscal quarter.
The adjustment in the stock price target to $108 is based on 12 times the estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal year 2025. The firm's decision to reiterate the Hold rating was influenced by the recent performance of Disney's stock, which seemed to react to the comparison with the first fiscal quarter's broad appeal as much as the actual results reported.
Despite the positive earnings report, TD Cowen has revised its fiscal year 2024 revenue estimate for Disney downward from $91.2 billion to $90.8 billion, which represents an 8% year-over-year decrease. Still, the adjusted operating income (OI) forecast remains approximately the same at $16.0 billion, indicating a 25% year-over-year increase.
The adjusted EPS forecast has been slightly adjusted from $4.73 to $4.81, which is a 28% year-over-year increase and marginally higher than the company's guidance, attributed to lower net interest expenses.
The updated stock price target reflects a more optimistic view of Disney's valuation, suggesting a modest upside from the previous target while the Hold rating indicates that TD Cowen advises investors to maintain their current position in the stock without further buying or selling at this time.
The firm's analysis points to a cautious but steady outlook for Disney's financial performance in the upcoming fiscal year.
InvestingPro Insights
Walt Disney (NYSE: DIS) has shown resilience in its recent fiscal performance, and with the company's earnings guidance for fiscal year 2024 being raised, investors are eyeing the entertainment giant's future prospects.
According to InvestingPro data, Disney boasts a market capitalization of $193.08 billion, reflecting its substantial presence in the industry. Despite a high price-to-earnings (P/E) ratio of 64.45, which indicates a premium valuation, the company's earnings are expected to grow this year, as per one of the InvestingPro Tips. This tip correlates with the firm's optimism about Disney's earnings per share (EPS) guidance increase.
Another relevant InvestingPro Tip for Disney is its strong return over the last three months, with a 17.48% price total return, which may interest investors looking at recent performance indicators. This aligns with TD Cowen's observation of the stock's responsiveness to market conditions and the positive earnings report.
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It is also noteworthy that Disney is trading at a high earnings multiple, as highlighted by another InvestingPro Tip, which may suggest the market's confidence in its future growth despite the current valuation. The company's revenue for the last twelve months as of Q1 2024 stands at $88.94 billion, with a 5.35% growth, which, although modest, indicates a steady upward trajectory. This data point provides context to TD Cowen's revised revenue estimate and supports the narrative of a cautious yet positive outlook for Disney.
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