Guggenheim Boosts Disney Price Target to $140, Sees Stronger Profit and DTC Momentum
Summary
Guggenheim raised its price target for Disney (DIS) to $140 from $120, maintaining a Buy rating. The firm cited improved operating forecasts, resilient theme park performance, and momentum in the direct-to-consumer (DTC) business as key drivers. Guggenheim's updated model reflects cost efficiencies, strong sports ad revenue, and the positive impact of gaining full ownership of Hulu, which is expected to bolster Disney's unified streaming strategy and bundling opportunities. The firm's revised earnings forecasts slightly exceed Street consensus.
Guggenheim Raises Disney Price Target to $140 on Stronger Profit Outlook and DTC Momentum
NEW YORK, NY – Guggenheim Securities has increased its price target for The Walt Disney Company (NYSE: DIS) to $140, up from its previous target of $120. The firm reiterated its 'Buy' rating on the entertainment giant, citing a more optimistic view on Disney's operating performance, the continued strength of its theme parks, and a clearer path towards profitable growth in its direct-to-consumer (DTC) streaming business.
In a research note to clients, Guggenheim analysts highlighted several factors contributing to their updated outlook. The firm has refined its financial model to incorporate positive developments, including anticipated lower operating expenses within Disney's Linear Networks segment. This improvement is partly attributed to the divestiture of Star India and ongoing company-wide cost efficiency initiatives.
While acknowledging that some recent film releases, such as 'Elio' and 'Thunderbolts', experienced modest underperformance at the box office, Guggenheim noted that this was partially offset by stronger-than-expected performance in Sports advertising revenue. This segment benefited from overall audience growth, particularly during the recent NBA Finals, demonstrating resilience in live sports viewership and associated ad spend.
The Disney Experiences division, encompassing theme parks, resorts, and cruise lines, continues to be a significant driver of earnings stability. Guggenheim's analysis indicates sustained resilient attendance levels and robust travel demand across Disney's global destinations, underpinning the division's strong financial contribution.
A key catalyst identified by Guggenheim is Disney's impending full ownership of Hulu. The company is set to make a $439 million payment to Comcast by July 24 to secure the remaining stake. This consolidation is expected to accelerate Disney's unified DTC strategy, facilitating deeper integration between Hulu, Disney+, and the forthcoming ESPN streaming service. Analysts believe this integration will unlock new bundling opportunities, enhancing subscriber value and driving revenue growth across the streaming portfolio.
Based on these factors, Guggenheim has revised its fiscal third-quarter segment operating income forecast for Disney to $4.5 billion, an increase from its prior estimate of $4.4 billion. This upward revision contributes to a higher full-year segment operating income projection of $17.7 billion, slightly exceeding the current Street consensus of $17.65 billion. The updated financial forecasts reinforce Guggenheim's conviction in Disney's potential for sustainable profit expansion and its strengthening competitive position, particularly within the dynamic streaming market.
Guggenheim's maintained 'Buy' rating and increased price target signal confidence in Disney's strategic direction and operational execution as the company navigates evolving media and entertainment landscapes.