UBS raises Disney stock target to $140 on earnings potential. Stock opened $121
On Wednesday, UBS analyst raised the price target for Walt Disney shares to $140 from $120, maintaining a Buy rating. The firm's optimism is based on the potential for higher earnings estimates in the coming quarters, fueled by strong performance in various business segments.
Disney's Parks, Direct-to-Consumer (DTC), and Content divisions are cited as key drivers for the anticipated earnings growth. The analyst projects a 25% compound annual growth rate (CAGR) over the next three years. The improved results at Disney Parks have been noted as a consistent factor outperforming expectations, which is expected to contribute significantly to the company's financial outlook.
The forecast for Disney's free cash flow (FCF) is set at approximately $9 billion for fiscal year 2024, which is higher than the company's own guidance of around $8 billion. Looking further ahead, the FCF is expected to increase to $14 billion by fiscal year 2026. This boost in cash flow is anticipated to support an increase in shareholder returns through buybacks and dividend growth, as well as allow for additional investments.
The analyst's positive outlook is further supported by the belief that new spending will enhance the capacity and offerings of Disney Parks, which have been a strong suit for the company. This investment is seen as a strategic move to sustain the high level of performance and growth within the Parks segment.
In summary, UBS's updated price target reflects confidence in Disney's ability to leverage its various business segments to generate higher earnings and free cash flow in the near to medium term. This financial strength is expected to enable the company to reward shareholders and invest in its future growth.
Disney's Parks, Direct-to-Consumer (DTC), and Content divisions are cited as key drivers for the anticipated earnings growth. The analyst projects a 25% compound annual growth rate (CAGR) over the next three years. The improved results at Disney Parks have been noted as a consistent factor outperforming expectations, which is expected to contribute significantly to the company's financial outlook.
The forecast for Disney's free cash flow (FCF) is set at approximately $9 billion for fiscal year 2024, which is higher than the company's own guidance of around $8 billion. Looking further ahead, the FCF is expected to increase to $14 billion by fiscal year 2026. This boost in cash flow is anticipated to support an increase in shareholder returns through buybacks and dividend growth, as well as allow for additional investments.
The analyst's positive outlook is further supported by the belief that new spending will enhance the capacity and offerings of Disney Parks, which have been a strong suit for the company. This investment is seen as a strategic move to sustain the high level of performance and growth within the Parks segment.
In summary, UBS's updated price target reflects confidence in Disney's ability to leverage its various business segments to generate higher earnings and free cash flow in the near to medium term. This financial strength is expected to enable the company to reward shareholders and invest in its future growth.
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