Walt Disney Co (NYSE:DIS, ETR:WDP) has earned a repeat ‘Buy’ rating from analysts at Bank of America, who remain optimistic about the entertainment giant’s growth prospects in 2025.
The analysts awarded the stock a $140 price target. Shares traded hands at about $98 on Friday.
“Following strong Q1 results, there was increased confidence in Disney’s ability to hit, if not potentially exceed, their fiscal year 2025 outlook,” Bank of America analysts wrote.
“While recent macro uncertainty adds risks, we do not see signs of underlying fundamentals coming under pressure.”
The analysts expect to see a sequential improvement in Disney’s experiences segment, which includes its parks and cruise business, in the second quarter.
Disney's recovery is expected to accelerate further in the second half of the fiscal year, driven by easier comparisons to previous periods, such as inflation and the Paris Olympics, as well as the addition of a new cruise ship expected to be profitable in its first full quarter.
Although the segment has faced challenges recently, including difficult comparisons, wage inflation, and preopening costs for new cruise ships, demand for ancillary products like the Premier Pass is showing signs of healthy growth, which will help boost yield, the analysts wrote.
Advertising and streaming trends
In the advertising space, Disney’s sports segment continues to show resilience, with strong performance.
However, the streaming video segment is still navigating through an increasingly crowded market, particularly with Amazon’s growing presence. The end of a wholesale deal with Canal+ is expected to result in a sequential decline in net additions for Q2.
Despite these headwinds, Disney continues to expect growth in direct-to-consumer (DTC) average revenue per user, though the full impact of recent price increases may be delayed due to the mix of subscriptions and bundling.
“While DTC is expected to be an investment year, we believe there will be some discretion around the magnitude of spend and there should be some benefits in DTC from recent price increases, password sharing and a ramping advertising business,” analysts wrote.