Seaport Global Upgrades Walt Disney to Buy with $108 Price Target amid…

Source: Davit Kirakosyan

Seaport Global Securities Upgrades Walt Disney to Buy

Seaport Global Securities recently upgraded Walt Disney (NYSE:DIS) from Neutral to Buy, with a price target of $108 on the stock. This move came as a result of a change in their outlook on Disney, prompted by improved macroeconomic conditions and better prospects for the company. In the past, the analysts had downgraded Disney shares due to concerns about stagnant attendance at the Parks division and decreasing operating income. The increased investment in the company’s direct-to-consumer (DTC) platform also led to a reduction in their profitability estimates for fiscal year 2025.

Shifting Perspectives: Optimism for Disney’s Future

The Seaport Global Securities analysts now have a more positive view of Disney’s future, driven by a more favorable macroeconomic environment. They believe that the market sentiment has shifted to be more accepting of the current state of Disney’s Parks demand and the progress being made in the DTC business, which is beginning to show signs of profitability.

While the data regarding Parks attendance remains somewhat lackluster, the analysts interpret it as a temporary setback. They are encouraged by recent developments in Disney’s DTC segment, including price increases and paid-sharing initiatives, which are expected to boost growth in both average revenue per user (ARPU) and subscriber numbers.

Factors Driving Disney’s Positive Outlook

1. **Macroenvironment Favorability**: The changing macroeconomic conditions are anticipated to create a more conducive environment for Disney’s growth prospects. As consumer sentiment improves and disposable income levels rise, the entertainment giant stands to benefit from increased consumer spending across its various segments.

2. **DTC Strategy**: Disney’s strategic focus on the direct-to-consumer business model is gaining traction, with the company making significant investments in content development and technological enhancements for its streaming platforms. The analysts recognize the potential for Disney’s DTC services to drive long-term revenue growth and enhance its competitive position in the digital entertainment space.

3. **Parks Recovery**: While the Parks division faced challenges in the past, including flat attendance, the analysts are optimistic about the gradual recovery of this segment. As global travel restrictions ease and consumer confidence rebounds, Disney Parks may experience a resurgence in visitor numbers and revenue generation.

4. **Revenue and Subscriber Growth**: The recent initiatives undertaken by Disney, such as price hikes for its streaming services and innovative content offerings, are expected to fuel growth in both ARPU and subscriber numbers. These positive trends bode well for the company’s financial performance and market competitiveness.

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