Walt Disney: Citi resumes coverage with ‘Buy’ on favorable risk-reward profile
Investing.com– Walt Disney Company (NYSE:DIS) presents an attractive risk-reward opportunity at current levels, according to Citi analysts, who resumed coverage of the stock with a “Buy” rating
Citi forecasts Disney will achieve adjusted earnings per share (EPS) growth of about 8% in fiscal 2025, followed by 11% in 2026 and 13% in 2027. These projections align with Disney’s guidance of high single-digit EPS growth in FY25 and double-digit growth in subsequent years.
However, Citi’s EPS estimates of $5.35 for FY25 and $5.95 for FY26 remain slightly below Street expectations, indicating a 2% and 4% shortfall, respectively.
Citi has a target price of $125 for the stock.
The analysts highlighted Disney’s key growth drivers, including its direct-to-consumer (DTC) streaming operations, expected to reach ~10% EBIT margins by 2027.
Citi projects modest growth in average revenue per user (ARPU) of 2-4% annually, alongside subscriber additions of 8 million in FY25, 7 million in FY26, and 6 million in FY27.
Additionally, the integration of Hulu Live with Fubo, expected to close by fiscal Q3 2026, is anticipated to yield $140 million in annual synergies, analysts said in a note.
Meanwhile, Disney’s Entertainment segment is forecasted to benefit from a 20% recovery in the U.S. box office in FY25, according to Citi.
In the bearish scenario, Citi notes potential economic headwinds or intensified competition could drive Disney’s valuation down to $96 per share. Conversely, a bullish case envisions stronger-than-expected ARPU growth and a more favorable valuation, pushing shares to $134.
Citi’s target price implies a 15% upside from Disney’s current share price of $108.70 as of January 21, with analysts citing the company’s pivot to streaming profitability and investments in parks and cruise ships as catalysts for growth.
