Disney Hits New 52 Week High On Analyst Upgrade

Shares of entertainment giant Disney gained 2.8% on Monday following an upgrade from Barclay’s based on the belief that the company’s turnaround plan is taking shape.

Barclay’s analyst Kannan Venkateshwar upgraded Disney to Overweight from Equal Weight while also increasing his price target on the stock substantially to $135 from $95. With shares currently trading around the $120 level, that implies a roughly 15% upside from current levels.

In his note Venkateshwar recommended the stock based on a number of factors that have increased investor confidence over the past several months. Those include better than expected earnings guidance and free cash flow from the company, the consolidation of Hulu and other cost cutting measures, along with some outside events such as the strike in Hollywood.

He also notes that Disney is already outpacing the markets this year, thanks to the propensity for media investors to be long Disney shares. Since the start of 2024 Disney shares have handily outpaced the S&P 500 and Dow Industrials, rising by 31.8% versus gains of 9.5% and 4.3% respectively for the indices.

With shares hitting a new 52-week high on Monday it’s been a significant turnaround for the stock, which was trading at multiyear lows during 2023.

Disney has been struggling with losses from its streaming services, a decline in traditional television viewership and the associated ads revenue, and slower growth at its theme parks.

However, Venkateshwar believes that the second half of 2024 could be more impactful for Disney’s financials as a number of the turnaround elements are still works in progress. He specifically mentioned the possibility of profitability for Disney’s streaming service, which he believes would be bullish for Disney’s stock price.