Key insights
- Raymond James upgraded Disney to Outperform with a $115 price target, citing attractive valuation due to macro and international headwinds. The analyst sees potential in Disney's streaming business and expects tailwinds in the second half of fiscal 2026 from new cruise ships, reduced competition, and favorable sports rights timing. While acknowledging near-term risks, the firm believes the stock is undervalued even under stressed scenarios.
Investing.com -- Raymond James analyst Ric Prentiss on Wednesday upgraded Walt Disney shares to Outperform from Market Perform, setting a price target of $115, saying the current macro backdrop and international visitation headwinds represent "an opportunity to invest at a very attractive valuation."
”We have stress-tested our model, examining not only our base case, but several bear cases with varying levels of severity, and believe the stock remains historically cheap even in some of the more draconian scenarios,” Prentiss wrote.
At roughly 15x forward earnings and 13 times forward valuation free cash flow, Disney trades at a meaningful discount to its 10-year medians of approximately 20x price-to-earnings (P/E) and 23x price to free cash flow (P/FCF).
Prentiss did not move the rating all the way up to a Strong Buy, citing "very real Parks headwinds and macro risks." The move was also not a call on the upcoming fiscal second-quarter print for March 2026, he stressed, which could come in flat or down year-over-year on adjusted earnings per share.
Instead, the analyst remains focused on the second half of fiscal 2026, when tailwinds are expected to build, including two cruise ship launches, the beginning of lapping competition from Universal’s Epic Universe, the opening of Paris Disneyland’s Frozen expansion, and more favorable sports rights cost timing.
A central pillar of the bull case is Disney’s direct-to-consumer streaming business, which Raymond James expects to generate $3 billion in incremental operating income from Entertainment SVOD between fiscal 2025 and fiscal 2028. The DTC ramp is expected to be "much less macro-sensitive” than the Experiences segment, Prentiss noted.
On the Parks business, he acknowledged that international visitation — typically in the mid-teens percentage of domestic attendance post-COVID — has already been depressed, and said lower international visitation appears already priced into the stock.
Raymond James trimmed its adjusted EPS estimates for fiscal years 2026, 2027, and 2028 to reflect a more cautious near-term view on Parks.