Disney Stock Catches 3 Upgrades In a Single Week

Key Points

• Disney shares have continued to gather momentum since last quarter's low.
• This week saw several upgrades to ratings and price targets. 
• A fresh street-high price target of $140 points to a further upside of at least 15%.  

Despite a shortened trading week due to the long weekend, it's already been a great one for Walt Disney Co. NYSE: DIS. As shares continue to rally from last October's lows, it's starting to look like the multi-month downtrend has been broken, and the stock is in an uptrend. 

Shares started this week up more than 45% from last quarter's low point but have added almost 5% to that since Monday. Much of the extra momentum has come in the form of bullish upgrades and comments from analysts, which can be among the best kinds of tailwinds a stock can get. And for those on the sidelines thinking they've missed the boat on Disney, the company gives us several reasons to think this rally is just getting started. 

Bullish Momentum Remains Intact

Take Monday's update from Barclays, for example. The team there upped their rating on Disney shares from Equal-Weight to Overweight on the back of what they called the "recent narrative reset." Having weathered the worst of the storm of the past two years, Disney has emerged better and stronger, and the Barclays team expects this to soon be reflected in positive earnings revisions.

They also took note of the ongoing boardroom drama between Disney's leadership and investor Trian Fund Management. There's a key vote due to take place next week, but amidst the relentless stream of Disney-related updates leading up to the proxy vote, Barclays analyst Kannan Venkateshwar said that investor focus remains steadfast.

Notwithstanding the negativity in the headlines, the sustained attention is expected to bolster the stock's performance in the short and medium term, driven mostly by positive indicators such as surpassing free cash flow and EPS projections for the full fiscal year. The consistent flow of announcements since February's bullish earnings report, coupled with investor confidence in future earnings estimates, is likely to help keep Disney's stock outpacing the broader market for the rest of the year.

Price Targets Increased 

Barclays' revised price target of $135 is not only more than 40% higher than the $95 they were previously targeting, but it's pointing to further gains of more than 10% from where shares closed on Wednesday. Were Disney shares able to trend up towards that level in the coming weeks, they'd be at fresh 52-week highs and well above the $126 level where the stock's previous best attempt to break the downtrend failed. 

Given that Disney still has so much ground to cover to undo the selloff that started back in 2021, it's a strong stance to take, but Barclays is far from alone. On Tuesday, the team at Raymond James reiterated their Outperform rating on Disney shares, and UBS Group did the same thing on Wednesday. Both teams upped their price targets on Disney shares at the same time, with UBS' $140 now a street-high target that's pointing to a further upside of more than 15%.  

Considering a Position

Despite the challenges encountered during the tenure of Disney CEO Bob Iger, you can't help but get the feeling that the Disney narrative has indeed been reset. Several bullish catalysts lie ahead, including strategic partnerships for ESPN streaming and consolidation of the Hulu business. A renewed focus on operational efficiencies and succession planning has clearly boosted investor confidence, and there's every reason to think the bullish momentum seen in shares so far this year should continue. 

With the stock's relative strength index (RSI) currently at 78, there are some signs that Disney shares are a little overheated, so investors should factor that into their planning. But taking the updates from this past week alone, any dip could be considered an entry opportunity as Disney gets back to doing what Disney does best: rallying.