Disney stock forecast 2025: Is it time to buy now?

 

The much-watched Disney released its second quarter financial report this year.

 Benefiting from the strong recovery of theme parks and the rapid growth of streaming media business, its net profit and revenue both beat expectations.  Disney's stock price rose 5% after the market.

 Let's take a look at the highlights of Disney's earnings this quarter.

 In the second quarter, Disney’s total revenue reached 17.02 billion US dollars, exceeding analysts’ expectations of 16.76 billion US dollars, a year-on-year increase of 45.5%.  Net profit turned from loss to profit, from a loss of US$4.721 billion last year to a profit of US$918 million.  From the perspective of departmental business, Disney Parks, Experience and Products departments have brought a boost to the company's revenue.

 Since the economic restart, Disney's theme parks, cruise ships and offline merchandise retail businesses have all been greatly improved. The quarterly revenue of these businesses was US$4.3 billion, four times that of the same period last year.

 In addition, mainly due to the increase in the total revenue of the video software Hulu, Disney's streaming media business has also been amazingly improved, with operating losses falling from US$600 million to US$300 million.

 At the same time, the number of paid users of Disney+ increased by 12.4 million to 116 million, beating the market expectation of 110-115 million.

 Although Disney's online and offline business performed well in the second quarter, investors are more concerned about Disney's guidance for the next quarter.

 Regarding the issue of park visitor numbers, Disney CEO Bob Chapek said he is not currently worried.  The existing reservations of the park have already exceeded the data in the financial report, indicating that the total demand is still rising.  In addition, they also expect all park employees to return to the park by the end of this year and gradually increase the number of guests.

 At the same time, Disney has shown great confidence in the future growth of streaming media users.  The CEO believes that although the user growth rate of streaming media fluctuates, Disney's user stickiness is very strong, the user change rate is very low, and the user growth trend is also very stable.  Disney expects to release multiple new films in the next quarter to attract more subscribers.

 After Disney's stock price rose sharply, many investment banks maintained a "buy" rating and slightly raised their target prices.

 UBS has given a new target price of $215, saying that although Disney has raised the streaming media subscription price, the number of users has not decreased, showing that Disney has strong pricing power.  At the same time, they expect that the popularity of Disney theme parks will continue until the end of this year, heralding higher departmental revenue.

 Morgan Stanley gave a target price of $210, believing that Disney's theme park upgrades during the epidemic will attract more tourists in the future.

 I am also optimistic about the development of Disney.

 In the next few quarters, I think the U.S. economy will move from physical consumption to service consumption. As a typical service company, Disney will continue to benefit from it.  In the future, with the gradual improvement of the global epidemic, the proportion of Disney's international tourists will increase, and their spending power is usually stronger, which will drive the increase in theme park revenue.  At the same time, Disney's cruise business will continue to generate cash flow for it, which may become a short-term surprise for Disney.

 Personally, I am not worried about the impact of the Delta virus.  I think even if it has an impact, it will not be too great.  In the long run, I think Disney+'s online business will provide the driving force for its development.  Disney plans to carry out large-scale promotion activities one after another around the world, and I think the number of users will continue to grow rapidly.  The problem is that the stock price has been overdrafted too much in the past year, and there is room for future upside, but it may not be able to achieve exciting levels.  In addition, its contention competition with Netflix is ​​also a big risk.