Wall Street investment firm Jefferies upgraded Walt Disney stock from Hold to Buy on Monday, raising its price target to $144 from $100 and citing the entertainment giant's cruise expansion and streaming turnaround as key drivers for future growth.
The upgrade comes as Disney trades near its 52-week high of $122.94, with the stock showing momentum after a 24.86% return over the past year. Jefferies analyst James Heaney pointed to four primary reasons for the upgrade, including limited risk of a second-half 2025 slowdown in Disney's Parks segment despite the opening of competitor Universal's Epic Universe.
The investment firm expressed particular optimism about Disney's cruise operations, projecting over $1 billion in revenue uplift for fiscal year 20261. Disney Cruise Line's annual report for fiscal year 2024 showed improved revenue and operating income compared to the prior year, driven by higher average ticket prices and increased passenger cruise days2.
The cruise line anticipates continued profitability in 2025 from expanded capacity, including the Disney Treasure, which began operations in December 2024, and the upcoming Disney Destiny and Disney Adventure, scheduled for delivery in the first quarter of fiscal year 20262. Disney has four additional cruise ships planned for delivery between 2027 and 20312.
Disney's Direct-to-Consumer segment has shown marked improvement, with the company projecting continued margin expansion from 0% in fiscal year 2024 to more than 13% by fiscal year 20281. The streaming division reported $336 million in operating income during the second quarter of fiscal 2025, up from $47 million the previous year23.
Disney+ added 1.4 million subscribers globally in the second quarter, bringing the total to 126 million, while the combined Disney+ and Hulu subscriber base reached 180.7 million23. The company is set to complete its acquisition of Hulu's remaining 33% stake from NBCUniversal for $438.7 million by July 24, 20254.
Jefferies noted that Disney failed to grow operating income from fiscal year 2016 through fiscal year 2024 but believes "this dynamic is set to change"1. The firm's price target represents approximately 20 times fiscal year 2027 price-to-earnings ratio1.
Disney CEO Bob Iger commented on the Hulu acquisition resolution: "Completing the Hulu acquisition paves the way for a deeper and more seamless integration of Hulu's general entertainment content with Disney+ and, soon, with ESPN's direct-to-consumer product"2.
