Some upticks sneak up on you. Shares of Walt Disney (DIS 0.77%) notched a fresh 52-week high on Thursday and again on Friday this week. This follows the media giant scoring a 23% jump last year, matching the S&P 500's return after falling short in each of the three previous years. The media giant is actually winning so far in 2025.
Disney stock's 11% ascent this year heading into the weekend may not seem like a lot, but it's more than double the S&P 500's comparable 5% gain. Bears may be surprised to see Disney outperforming the market over the past year and a half, given its uninspiring top-line growth and some recent misses on high-profile theatrical releases. Reality is kinder than the negative narrative. Let's take a closer look at how Disney is overcoming its near-term challenges while thriving in the new normal.
18 months of pixie dust
Disney shares are up more than 35% since the start of last year, and that's not including the modest dividend that it reinstated at the start of fiscal 2024 and has already hiked twice. Trailing revenue has only risen 6% from where it was six quarters ago. Disney also has had a few misfires at the multiples this year. The rising shares may not seem to match the fundamentals, but there are a lot of neat things happening at the House of Mouse outside of those two knocks.
Fiscal 2024 was a breakthrough for Disney. It reversed a disappointing 2023 at the box office by landing last year's three highest-grossing movies worldwide. Disney+ and the rest of the company's streaming operations turned profitable halfway through the year, earlier than expected. Generating positive net income after sporting massive losses has done wonders for the bottom line. Disney's trailing operating profit has increased 50% since the end of fiscal 2023, with earnings from continuing operations soaring nearly threefold in that time.
Disney has seen disappointing ticket sales for its Snow White live-action reboot and Pixar's computer-animated Elio in 2025, but they haven't all been theatrical duds. The studio has put out more than half of this country's top five releases this year. Disney also posted blowout quarterly results in May, silencing any potential bearish rumblings. On the theme park front, Disney's domestic operations surprised Wall Street with a strong showing in its latest update. There was also the bar-raising news of a new Disney-licensed theme park being built in Abu Dhabi, bankrolled by the developer. This is a different kind of Disney coasting now, and Wall Street is starting to pay attention.
Image source: Disney.
Rising tides
The latest analyst to grow rosier on Disney is Guggenheim. Analyst Michael Morris boosted its price target on the shares from $120 to $140. He's sticking to his bullish buy rating on the shares, and with the shares now above $120, it makes sense for a positive revision.
Guggenheim's analyst points out that the refreshing strength for Disney's experiences segment -- along with a favorable sports advertising forecast and encouraging operating expense outlook for the fading linear networks -- should more than offset the studio stumbles. Morris is boosting his segment operating income projection from $17.6 billion to $17.7 billion for the current quarter that ends this week. He also welcomes Disney's move to finally take full control of Hulu, as it can now take advantage of the segment's profitability to make a stronger approach to seamlessly bundling its direct-to-consumer streaming platforms.
Disney stock may not seem cheap. It's trading for almost 20 times Wall Street's profit target for the new fiscal year that starts in three months. However, those earnings estimates have been inching higher since Disney's strong quarter, and that report wasn't an outlier. Disney has posted double-digit percentage beats on the bottom line in all but one of its past four quarters.
Momentum is on Disney's side. It has a promising slate of multiplex releases in the second half of this calendar year. As long as the global economy doesn't become the latest Disney villain, Disney should continue to enjoy its dominant market position. The stock may be trading at a new 52-week high, but this doesn't mean that it's all downhill from here.
