Citi has resumed coverage of Walt Disney Co. (DIS) with a "Buy" rating and a $125 price target, citing an attractive risk-reward profile at current levels. The report highlights Disney's strategic initiatives, including the pending merger of its India assets with Reliance and the launch of ESPN 'flagship' in Fall 2025, as key growth drivers. Citi forecasts Disney's adjusted EPS to grow by approximately 8% in FY 2025, with double-digit growth expected in FY 2026 and FY 2027. However, Citi's estimates are slightly below Street expectations, with FY 2025 and FY 2026 EPS projections at $5.35 and $5.95, respectively.
The report outlines a base case scenario where Disney's revenue is expected to reach $94 billion in FY 2025, driven primarily by growth in the Entertainment and Experiences segments. Citi also considers potential risks, such as macroeconomic weakness and competition from Universal's Epic Universe, which could impact Disney's performance. Despite these challenges, Citi remains optimistic, stating, "We like Disney as we see scope for the market to fully embrace the firm’s DTC pivot as profitability continues to improve."
Disney's stock was trading at $109.48 as of January 21, 2025, with a 0.72% increase after market close.