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Highlights

  • Jefferies has raised Disney rating to Buy, citing first operating income growth in nearly 10 years.
  • Price target lifted to USD144 from USD113 amid favorable trends in parks, cruises, and streaming.
  • Analysts see cruise expansion and ad-supported streaming as key contributors to revenue lift.

 

Jefferies has upgraded Walt Disney Co. (NYSE: DIS) from Hold to Buy, signaling a shift in sentiment as the entertainment conglomerate begins showing signs of operating income growth for the first time in nearly a decade. The firm also raised its price target on Disney stock to USD144, significantly above the current average analyst target of USD131. 

According to Jefferies, Disney’s improved outlook is driven by a combination of factors including better-than-expected momentum in its parks and experiences division, increased cruise bookings, and renewed confidence in the trajectory of its streaming business. Shares of Disney were recently trading near USD123, up nearly 11% year-to-date, aided in part by a broader market rally and more favorable policy signals from Washington. 

The report highlights the company’s efforts under CEO Bob Iger to address structural challenges that have weighed on Disney’s financial performance since 2016. Jefferies noted that despite previous headwinds including acquisitions, shifts in consumer behavior, and inconsistent content execution recent adjustments suggest a clearer path toward margin recovery. 

One of the primary growth areas cited is Disney’s cruise business, which is expected to expand with the addition of two ships in early 2025. Jefferies estimates this could contribute an incremental USD1 billion to USD1.5 billion in annual revenue. Meanwhile, demand for domestic and international theme parks remains firm, supported by stable consumer spending in travel and leisure. 

The firm is also more optimistic about Disney’s streaming segment. Jefferies projects Disney+ can add approximately 5 million subscribers annually, supported by targeted advertising partnerships such as its recent integration with Amazon. This ad-supported model is seen as a potential driver for revenue growth without significantly increasing churn. 

While Disney continues to operate in a competitive environment across content, streaming, and leisure sectors, Jefferies believes recent strategic shifts and operational execution could allow the company to break out of the low-growth pattern that has defined much of the past decade. 

The upgrade reflects increased confidence in Disney’s multi-pronged approach to earnings improvement, even as broader economic and competitive pressures remain.