On Tuesday, Raymond James increased its price target on shares of Walt Disney (NYSE: NYSE:DIS) to $128 from $122, while reiterating an Outperform rating. The adjustment comes as the firm revises its model to incorporate recent commentary from the company and the divestiture of a majority stake in its India operations.
The firm's analyst cited improved operational income growth expectations for Disney's domestic and international parks business for the second fiscal quarter of 2024. The growth forecast aligns with CEO Bob Iger's recent statement anticipating low to mid-teens combined operating income growth, implying a low-teens increase for the Experiences segment overall.
Moreover, the analyst made revisions to the Linear Networks division, slightly reducing the margin assumption to reflect the anticipated costs of ramping up television production following last year's industry strikes. This adjustment is set against the backdrop of a recalibrated noncontrolling interest, which no longer accounts for Comcast (NASDAQ:CMCSA)'s 33% stake in Hulu.
The culmination of these changes has led to a minor increase in the forecast for Walt Disney's fiscal year 2024 free cash flow. The new estimate stands at $8.35 billion, up from the previous $8.30 billion, after CEO Iger indicated that the company is on track to surpass its earlier guidance of approximately $8 billion.
InvestingPro Insights
Following Raymond James' updated outlook on Walt Disney (NYSE: DIS), real-time data and InvestingPro Tips offer additional context for investors considering the entertainment giant's stock. With a market capitalization of $217.4 billion and a revenue growth of 5.35% over the last twelve months as of Q1 2024, Disney's financial stature remains robust.
The company's P/E ratio, while high at 72.65, reflects the market's optimistic earnings expectations, and this is further underlined by a lower adjusted P/E ratio of 43.29 for the same period.
InvestingPro Tips suggest that Disney's net income is expected to grow this year, aligning with the operational income growth expectations highlighted by Raymond James. Moreover, the stock is trading near its 52-week high, showcasing the strong return it has provided over the last three months, with a price total return of 31.24%.
This could be indicative of the stock's momentum, though the RSI suggests the stock is in overbought territory, which could be a caution for short-term investors.
For those looking to delve deeper into Disney's financials and future prospects, InvestingPro offers additional tips. There are 10 more InvestingPro Tips available for Walt Disney, providing a comprehensive analysis for subscribers. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable insights.
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