Disney stock forecast

Disney Stock Forecast: What will DIS stock be worth in 5 years?

For as long as many can remember, Disney (NYSE: DIS) has been at the forefront of the entertainment world. This includes amusement parks, media, and now streaming.

Throughout 2020 amusement parks shut down due to COVID-19 safety measures. Disney began searching for a more suitable source of revenue. Fortunately, Disney+ and other streaming content was the perfect candidate for keeping Disney afloat.

However, despite its incredible streaming content efforts, many investors are beginning to wonder if the results of these efforts are slowing as evident in recent quarterly results. In this article we will be diving into the Disney Stock Forecast over the coming years.

Disney’s Recent Quarter

In Disney’s fiscal fourth-quarter results, many investors were surprised to see a substantial decline in the growth rate of Disney+ compared to the previous quarters. Disney added 2.1 million new subscribers, totaling 118.1 million. However, this fell drastically out of analyst expectations of 9.4 million new subscribers.

On top of Disney+ missed estimates, Disney’s revenue and earnings also didn’t meet Wallstreet expectations. Analysts forecasted an earnings per share (EPS) of $0.51 and revenue of $18.79 billion. Instead, Disney reported an adjusted EPS of $0.37 and $18.53 billion in revenue. These results are what led Disney’s share price to tumble in the after-hours trading which declined as much as 8% in the following trading day.

Despite the disappointing quarter, Disney announced plans to reach 230 to 260 million total Disney+ subscribers in the next few years. They plan to do so by ramping up the production of original content for the streaming platform. This would undoubtedly work in their favor over the long term as it incentivizes new subscribers to continue their ongoing subscription and create additional customers in the process.

“We continue to manage our DTC business for the long-term, and are confident that our high-quality entertainment and expansion into additional markets worldwide will enable us to further grow our streaming platforms globally.”

said Bob Chapek, Chief Executive Officer, The Walt Disney Company in Q3 earnings call.

Here’s what Wallstreet had to say

Following the companies fourth quarter performance, Wells Fargo analyst Steven Cahall remains upbeat on the firms Disney stock forecast despite lowering the companies target to $193.

The lower valuation was primarily due to the Disney+ subscriber slowdown. Cahall believes slower content output was the culprit, however believes subscriber growth can be revived over the next few quarters. The analyst added that Disney+ is now at a $150B discount to Netflix (NASDAQ:NFLX) based on his deconstruction, remaining bullish on the current valuation.

The Wells Fargo analyst highlights an important factor surrounding the current valuation of Disney’s streaming service. Undoubtably, Disney+ still has plenty of market share to gain as we move into 2022. This bullish thesis is also backed up by Deutsche Bank analyst Bryan Kraft.

Kraft recently noted that the long term picture for Disney stock “is still very much intact” despite slower content availability for Disney+ and costs related to re-opening Disney Parks to full capacity. The analyst currently has a price target of $191 on Disney stock, implying an upside of 27.3%.

The average valuation from Wallstreet suggests a 31% upside from Disney’s current trading price. This suggests at the current price analysts see value in the Disney stock forecast over the next 12-24 months.

Disney stock forecast

Disney Stock (NYSE:DIS) valuation

As it currently stands, Disney still needs to bring their amusement parks back to full capacity, as well as continue to execute on their streaming platform goals. Prior to COVID-19, Disney was able to generate $7+ Billion a quarter from its Amusement Park business. However, some analysts see park revenues exceeding this amount in the near future. In fact, by 2024 Deutsche Bank sees Theme Park operating income growing at an estimated 130% annually to $10B in 2024.

After a decline in Disney’s share price, it has reached a low price-to-sales ratio of just over 5, while the price-to-earnings ratio has continued to remain high as earnings have had difficulty returning to normal since parks haven’t been at full capacity.

However, Disney is showing signs of recovery on its balance sheet. Once all business segments are back to normal, Disney will likely continue to grow throughout the years by following its plan to build out Disney+ streaming content. Over the coming years, Disney’s blockbuster schedule looks promising with the release of Avatar 2 and Lightyear in 2022, Indiana Jones 5 in 2023. Looking further ahead, the streaming service will likely challenge Netflix for leading marketshare in the US by 2025 according to some estimates.

Disney Stock Forecast – Final Thoughts

Disney’s fourth-quarter fiscal year results weren’t as great as analysts expected. However, we can’t say for certain just yet if Disney has hit a roadblock in its business model until we see more quarterly results in the future.

Disney does have plans to reach over 230 to 260 million subscribers with Disney+ in the next few years. That could dramatically change the direction of the business in a positive light if these projections can be achieved.

Overall, the general consensus amongst Wallstreet institutions and investors remains optimistic on Disney’s long term thesis despite a slow Q4. We will continue to update the Disney Stock Forecast as we move into 2022.

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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you. 

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