Share prices of Walt Disney (DIS -0.04%) are up nearly 25% year to date, but analysts at MoffettNathanson believe the rally isn't over. Last week, the firm maintained its buy rating and raised the near-term price target on the shares to $125, up from $120. This represents an 11% upside from Disney's current share price of $112.75.
Disney has fallen on hard times, but MoffettNathanson analysts are more enthusiastic about Disney's prospects following CEO Bob Iger's comments at Morgan Stanley's Technology conference.
Why Wall Street believes Disney has turned the corner
Iger returned to Disney as CEO over a year ago with a promise to return the company to profitable growth, and the most recent earnings report showed significant progress in achieving that goal. Iger said he is confident Disney's streaming services, which reported huge losses on the bottom line last year, will reach profitability by the end of fiscal 2024 in September. Narrowing losses in the direct-to-consumer segment sent Disney's adjusted earnings up 23% year over year in the December-ending quarter.
MoffettNathanson analysts also like the direction of Disney's parks and experiences business. Iger noted the parks are doing great and should deliver growth in operating income in the low to mid-teens range.
Why buy Disney stock
The consensus on Wall Street expects Disney will report a 5.8% decline in total revenue for the full year, but earnings per share should increase 12.7% to $4.24.
The stock is trading at a forward price-to-earnings ratio of 25 based on the consensus estimate, which is fair for a top brand like Disney. If Disney shows improving financial results through fiscal 2025, which analysts expect, the stock could have a lot more upside. The stock is still trading about 43% off its previous high.
