Walt Disney (DIS) Stock Could Double If Wall Street Rethinks Its Valuation, Analyst Says

TLDR

• Needham reiterates a Buy rating on DIS with a $125 price target, implying ~32.7% upside
• Disney trades at 13.7x forward earnings — closer to cruise lines than media peers like Netflix at 28.5x
• Analyst Laura Martin says convincing Wall Street DIS is a media company could double its multiple
• New CEO Josh D’Amaro’s theme park background is raising concerns about leading the media segment
• Disney beat Q2 EPS estimates ($1.63 vs $1.57 expected) with revenue up 5.2% year over year to $25.98B

Walt Disney stock is trading in the same valuation neighborhood as cruise lines — and one analyst thinks that’s a big problem, and a bigger opportunity.

The Walt Disney Company, DIS

Needham analyst Laura Martin reiterated a Buy rating on Disney Tuesday, with a $125 price target. She pointed out that Disney currently trades at 13.7 times forward earnings — closer to Carnival at 10.5x and Royal Caribbean at 14.4x than to Netflix, which trades at 28.5x.

Martin’s note argues that the gap is the story. Disney is, fundamentally, a media company. But Wall Street isn’t pricing it like one.

The path to closing that gap, according to Martin, runs through streaming. She says Disney needs to commit to expanding streaming margins, launch bundles to reduce subscriber churn, and release more box office hits that drive sign-ups.

Disney does run a cruise line, and it’s growing that business intentionally. But the concern is that the market has started pricing the whole company like it’s mostly ships and theme parks.

New CEO Under the Microscope

That concern has been amplified by the CEO transition. Josh D’Amaro, who previously ran Disney’s experiences division — theme parks, resorts, cruise lines — was tapped to replace Bob Iger.

Some investors are uneasy. D’Amaro’s background is on the physical side of Disney’s business, not the media and streaming side. As linear TV viewership keeps falling and the streaming market gets more competitive, questions are mounting about his ability to lead that segment.

Disney also disclosed setbacks in its tech partnerships, including issues tied to its OpenAI and Epic Games relationships, adding to the headline noise.

On the positive side, Disney recently opened Disney Adventure World at Disneyland Paris — a roughly €2 billion expansion anchored by a World of Frozen area. Attendance and merchandising potential from the new park drew a positive market reaction.

What the Numbers Say

Disney’s most recent quarterly results were solid. The company reported EPS of $1.63, beating the $1.57 consensus. Revenue came in at $25.98 billion, up 5.2% year over year and above the $25.54 billion estimate.

Analysts expect full-year EPS of around $5.47. The consensus from 24 analysts is a Moderate Buy, with an average price target of $134.

Goldman Sachs has a Buy rating and a $151 target. Jefferies rates it Buy with a $132 target. Citigroup has a Buy with a $140 target. Wells Fargo cut its target to $148, though that still sits well above the current price.

The stock’s 52-week range runs from $80.10 to $124.69. Its 200-day moving average is $108.69.

DIS was up 0.3% Tuesday, trading at $94.59.

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