Disney shares surged dramatically on Thursday, marking their most remarkable single-day rally in the past decade, propelled by an exceptional earnings report. However, despite this surge, the entertainment giant is still striving to reclaim its former stock market prominence.
The stock skyrocketed by nearly 12% to $110.54, reaching its highest level since February 9, 2023, and representing its best performance since December 2020. However, in after-hours trading, it fell 0.35% to $110.15.
The significant uptick in Disney’s stock price was largely due to the company’s robust quarterly earnings results, projecting an earnings per share of $4.60 for the fiscal year concluding in September 2024. This forecast positions the company to achieve its most profitable year since 2019.
“The F1Q results saw the cont’d strength in Parks combine with a faster ramp in profitability at streaming and a more substantive benefit from last year’s efficiency initiatives. The result is over 20% adjusted EPS growth, which we think can compound into F25 and beyond,” said Benjamin Swinburne, Equity Analyst at Morgan Stanley.
Following this optimism, several equity analysts raised their price targets for Disney. Guggenheim Securities raised the stock price target to $125. Wells Fargo increased the price target to $128 while maintaining an “overweight” rating. Meanwhile, Sanford C. Bernstein maintained an “outperform” rating and lifted the stock price target to $115.
Bank of America also adjusted its price target, raising it to $130 from $110.
“We are raising our FY24 estimates to reflect FQ1 upside and management commentary and guidance. Our price target goes from $94 to $100 (12x FY25 est. EBITDA) on raised estimates. We maintain our Market Perform rating,” noted Doug Creutz, Equity Analyst at TD Cowen.
Despite this, Disney’s stock has faced significant declines, down over 40% from its 2021 peak, and it remains well below its all-time high. The company has underperformed the S&P 500 across various time frames.
While Disney’s projected profit per share of $4.60 for the current year falls short of its record profit achieved in 2018 by about 36%, analysts foresee a return to 2018 profitability levels by 2028.
“We believe the quarter validates the strength of Disney’s assets and the firm’s ability to survive the evolution of the media industry. We don’t think the story has changed. We’re maintaining our $115 fair value estimate and now believe the stock is only modestly undervalued,” said Matthew Dolgin, Senior Equity Analyst at Morningstar.