Is Disney Back? Why the House of Mouse Is Quietly Rallying

Parks, cruises and content are fueling the stock’s recovery

• Disney is up 30% year-to-date, and analysts believe it could continue to run higher.
• The company’s core revenue streams — parks, cruises and Pixar — have been resurrected and are poised for growth.
• New revenue streams (Disney+ and ESPN+) have stopped bleeding and are ready to turn profitable.
• Company fundamentals and the share price reinforce and legitimize this year’s growth.

Disney has been a leader in entertainment for decades . In fact, my grandmother gave me one share of DIS when I was born, and it’s now up 718%. Love you, Grandma! But despite many years of prominence, the company has stagnated of late, trading in the same range since early 2015 — apart from an unsustained breakout in 2021. 

While the last decade has been slow, Disney seems to be putting the right pieces into place to break free from that trend this year and beyond. Core revenue streams are reignited, new revenue streams are finally taking off and analysts are taking notice. 

Cruises, parks, and Pixar: Disney’s core is firing again

When you think of Disney, one of the first things that comes to mind is the parks. Cinderella’s Castle in Orlando leaves a lasting impression, and that’s just one of the company’s 12 parks around the world.  Attendance had been down since the pandemic but has exploded this year with near-record numbers for foot traffic, guest satisfaction and spending per guest. 

Movies, another core business for Disney, had been disappointing in recent years, compared to historical trends. But the company has done wonders to stop that slide. Inside Out 2 performed well at the box office, and Moana 2 is expected in Q4. Successful titles like these have once again hel nped the company hang its business on strong family-oriented tent poles.

Cruises, the company’s third and final core sector, are also booming. Bookings are up about 30% year-over-year, and the company plans to launch two new ships — the Disney Destiny and Disney Adventure — in 2025/2026.

One of Disney’s biggest strengths has always been the ability to leverage IP across multiple revenue streams, and with successful IP now back at their disposal that strength has begun to manifest itself in full force once again. 

Streaming stops the bleed — and ESPN begins to flex

The company has been criticized for the performance of Disney+ over the past few years and for good reason. The subscriber base has been and still is plateauing. But it’s been tactical with price hikes, ad tiers and bundling and has managed to raise average revenue per user by 12% year-over-year despite the stagnation.

One streaming service that has not plateaued is ESPN+, which is quietly gaining traction and has attracted 28 million users. It’s made moves toward standalone monetization and a possible spinoff or eventually an initial public offering (IPO). CEO Bob Iger has also teased further monetization strategies for ESPN’s sports betting integrations.

Between savvy business strategies with Disney+ and the steady growth of ESPN+, direct-to-consumer losses are narrowing quarter by quarter, and it’s possible this segment could turn profitable by FY2026 — a far cry from the money pit that these services were not long ago.

Disney breaks out — and so does analyst sentiment

The company’s stock is up over 30% year-to-date and just made new all-time highs in late June. Analysts have taken note and aren’t shy about their sentiment or about raising price targets as Disney works higher with no signs of slowing down. 

Jefferies, BMO and Barclays have all upgraded or reiterated their “buy” ratings in the last 60 days, and some firms have price targets as high as $140 or $150, which could be adjusted even higher should DIS maintain this momentum. 

The craziest part is analysts are not off-base or overly ambitious with those price targets. DIS is trading at a forward price-to-earnings (P/E) ratio of 21.8, which is in line with historical averages, but the revenue mix is healthier than it’s been since 2019. This isn’t a Palantir Technologies (PLTR) situation — analysts have legitimate backing for viewing this as a meteoric rise.

Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and #tastyliveTrending for stocks, futures, forex & macro. 
Trade with a better broker, open a tastytrade account today. tastylive Inc. and tastytrade Inc. are separate but affiliated companies.