Raymond James said Disney is trading at a discount, so it’s a good time for investors to buy into the stock. The investment firm upgraded the media giant to outperform the market. It also has a price target of $115, implying a 19% upside from Tuesday’s closing price. This price target implies a forward multiple of around 14x, “a significant discount to the 10-year median given macro concerns and park visitation headwinds.” “We view the current macro environment and international visitor headwinds as an opportunity to invest at a very attractive valuation,” analyst Rick Prentice said in a note to clients. Disney shares have fallen 15% this year, weighed down by expectations that attendance at the company’s theme parks could be weak this year. The company is dealing with a decline in international visitors to its domestic parks. At the same time, Disney faces increased competition from Universal Studios, which opened its Epic Universe property to the public last spring. But Disney stands to benefit from several tailwinds that could offset some of those headwinds, Raymond James said. This includes the launch of two new cruise ships and a Frozen-themed expansion at Disneyland Paris. “We have stress-tested the model, looking not only at the base case, but also at several bearish cases of varying severity, and we believe that even under some of the more severe scenarios, stocks remain historically undervalued,” Prentice said. Disney is also poised to gain ground with easier content and linear comparisons, along with more favorable sports rights costs on the TV and streaming side, analysts noted. Disney’s streaming business will account for the majority of the company’s operating profit growth from fiscal 2025 to an estimated fiscal year 2028, based on a combination of company data and analyst forecasts, Raymond James said. Prentice said this means headwinds affecting Disney parks may have less of an impact on the company’s bottom line than some investors expected. Raymond James’ call is in line with the Wall Street consensus. According to LSEG, 27 of the 33 analysts covering Disney have a positive buy or buy view on the stock.
