The Walt Disney Company: Don’t Miss This Chance for 75% Upside

Key Points

• Disney had a strong quarter and guided favorably, indicating improving earnings quality and growth this year. 
• ESP and Sports is a highlight in Q1, producing a profit and expected to accelerate business growth later this year. 
• Disney's stock price action is amid a reversal and on track to hit new highs, driven by results and analysts' sentiment. 

The Walt Disney Company NYSE: DIS is deep amid a business and market reversal that will increase its stock price by a high-double-digit to low-triple-digit amount over the next 12 to 18 months. The turnaround is driven by its CEO, Bob Iger, who has reinvigorated businesses, reclaimed operational quality, and set the entertainment company on a trajectory of sustained market-leading growth. 

The Q1 results highlight the strength of the portfolio despite the impact of natural disasters, including Hurricanes Milton and Helene. While its domestic park business was impacted, business was good internationally, and other strengths were seen. The Entertainment segment grew by nearly 9% yearly due to strength in numerous subsegments, including the studios, which boasted last year's top three box office hits. 

Another area of strength was the sports segment, including ESPN. This segment grew 24% sequentially and 0.4% year over year, with a notable improvement in operating performance. The company logged profits for this segment, offsetting losses in the prior year period, and is on track to sustain profitable growth over the coming years. Among the highlights from the earnings call were details about the soon-to-be-launched ESPN DTC offering. Mr. Iger called it a sports lover's dream, including personalized interfaces, fantasy leagues, and betting services. It and a password-sharing crackdown are expected to accelerate growth in 2026. 

Disney’s Beat-and-Raise Quarter Drives Analysts to Lift Price Targets

Disney had a solid quarter in FQ1 2025 with revenue of $24.7 billion, up more than 5% year-over-year. The revenue also outpaced MarketBeat’s reported consensus by 60 basis points and is compounded by margin strength. The company improved its operating profits in every segment except experiences, and there are mitigating factors involved. They include the impact of hurricanes on domestic business and preopening costs in the cruise subsegment. 

The future impact of hurricanes is impossible to forecast, but the preopening costs are seasonal and soon out of the picture. Regardless, Q1 consolidated earnings were good, and strength is expected to continue. GAAP and adjusted figures were up by high double-digit amounts and ahead of the consensus forecasts. Regarding the guidance, the company forecasts high double-digit income growth to persist through the end of the year, which has led the analysts to raise the consensus stock price target. 

The analysts' response to the news is a tailwind for the stock price. MarketBeat tracked five revisions within the first two days of the Q1 release, including four price target increases and a single price target reduction. However, all stock targets exceed the critical resistance target, and the bulk leads to the high-end range near $147. That’s a 25% increase from the critical resistance and a target easily reached, given the cash flow, capital return, and valuation. Disney isn’t cheap in 2025 but is very cheap, under 15x earnings, relative to 2030’s lowball estimates. 

Disney Capital Returns Will Help Drive Its Stock Price Higher

Disney’s dividend isn’t robust, but it is expected to grow robustly over the next two to three years as cash flow improves. The annual increases will catalyze the market; the next one will be done later this year, and repurchases are also in play. The company’s share buybacks are slightly more robust. They reduced the share count by 1% in FQ1 and are expected to continue reducing it as the year progresses. The balance sheet is a fortress with debt and liability falling and equity rising. 

Disney’s stock price action showed volatility following the release, but the bullish bias remains. The market faces stiff resistance at the long-term highs, near the top of a trading range, but support at the cluster of moving averages is strengthening. The likely outcome is a move to new highs, which may occur before the middle of the year. In that scenario, this market can continue to move higher until it reaches the next resistance target near $140. Longer-term, assuming the Iger Effect continues to drive operational results, growth, and analysts' sentiment trends, will likely lead this market back to all-time high levels, a gain of more than 75% from the critical support targets.