Walt Disney (NYSE:DIS) has been the target of a few downgrades over the last couple of months. Even though the latest downgrade from Vetr on Oct. 6 was from a "strong buy" to a "buy," it still follows the trend of analysts such as those at Wells Fargo and Bernstein downgrading Disney on the heels of Disney's Q3 earnings that showed operating pressures in the company's media network segment. Since those Q3 results were released on Aug. 4 and the downgrades started, the stock has taken a beating. Does Disney deserve these downgrades? If not, this might be an opportunity to buy in while the stock is still discounted.  

Image: ESPN.com.

Wall Street's worry
Disney's Q3 earnings certainly weren't bad, as Disney beat analyst expectations on revenue and earnings, with EPS up 13% over the same period last year. However, that didn't alter the fact that its media network segment felt the pressure of more people switching from traditional cable to other services, lowering revenue from Disney's major properties like ESPN and ABC Family.

It's true that media is Disney's largest segment and makes up about half of Disney's total revenue. It's also true that ESPN, the property feeling the most pressure now, makes up about two-thirds of that media segment revenue. Still, while that segment continues to feel pressure due to the changing media landscape, there are two reasons why the stock seems over sold on this. 

Two reasons Disney still looks strong
Disney is not just sitting back watching its largest property decline. You can bet that the company is focusing on getting on the right side of this changing media landscape. Additionally, the growth throughout the rest of the company in theme parks, movies, and consumer products is a testament to how strong the total business is.

1. Disney is working to stay ahead of the changing media landscape

The cable business has changed rapidly in recent years as more and more consumers opt to "cut the cord" and switch to streaming services. Though Disney did note in its Q3 earnings that it lost subscriber revenue, do investors really think that Disney is just going to sit on the sidelines waiting this one out? Disney already offers ESPN on Roku devices, released a completely revamped ESPN.com in April of this year, and continues to build its mobile infrastructure of apps. Speaking of apps, ESPN's mobile traffic doubled from 2013 to 2014, and we can expect another major increase when 2015 is reported. These investments show that Disney is going to do what it needs to to be ahead of the changing cable landscape, even if there is still going to be short-term pressure. 

Star Wars VII: The Force Awakens
. Graphic source: Disney.

2. The rest of the company continues to grow rapidly

The media network does make up half of the company, but the other half is still expanding rapidly with many exciting things coming down Disney's pipeline. First, there's the new Star Wars film coming out this December that could be the most lucrative film of all time when consumer products are taken into account. Next spring a new Disney theme park will open near Shanghai that is expected to be the most-attended park in the world its first year open. Then there's the lineup of new movies planned over the next few years that appears to be right on track with how well the company's studio entertainment segment had performed in the last few years. These and other similar highlights are likely to continue driving Disney's growth going forward. 

Taking advantage of Wall Street's poor sentiment
Even with this media network segment pressure, analysts forecast Disney's EPS to increase 18% for fiscal year 2015 ending Sept. 27 to $5.08 and then increase another 10% in 2016 to $5.60. By today's stock price around $107, the forward-looking fiscal year 2016 price-to-earnings estimate is just 19 times, which looks like a value now for such a well-performing company with such an exciting lineup in the near future. 

Yes, the decline in ESPN and other cable network revenue is daunting and likely to continue to be a pain in the coming quarters. Still, the stock seems oversold on analyst downgrades and could represent a buying opportunity for those looking at Disney's long-term strengths.