Disney stock (DIS) gained a respectable 23% last year, and while its returns were just in line with the S&P 500 Index ($SPX), it was a welcome break for investors as DIS stock posted just a 4% return in 2023. The company also underperformed the S&P 500 in 2021 and 2022. In this article, we’ll look at Disney’s 2025 forecast and examine the company’s outlook under President-elect Donald Trump who has been critical of the company over its “wokeness.”
Trump Has Been Critical of Disney
Trump has long been critical of Disney and even jabbed Florida Gov. Ron DeSantis for what he sees as his fellow Republican’s failure to stop Disney from “flouting traditional conservative values.” Most recently Trump praised Isaac Perlmutter, Marvel Entertainment’s former chairman, for quitting Disney. “He didn’t want woke Donald Duck,” said Trump while speaking to supporters at his private Mar-a-Lago club in Florida.
Brendan Carr, who is set to chair the Federal Communications Commission, also sent a letter to Disney CEO Bob Iger stating "Americans no longer trust the national news media to report fully, accurately, and fairly.” In his letter, Carr referred to an ABC News defamation suit that the Disney-owned company settled with Trump by paying $15 million.
Elon Musk, who heads the newly created Department of Government Efficiency, is no fan of Disney either. Musk previously attacked Iger and other executives who pulled advertising from X, formerly Twitter, after he acquired the platform.
To be sure, being at odds with the U.S. president and one of his key advisors is not a good position for Disney or its shareholders. However, over the medium to long term, fundamentals and earnings growth are the key drivers for any company, irrespective of who sits in the White House.
Disney 2025 Forecast
Disney expects its adjusted EPS in fiscal 2025 to rise in the high single digits and is projecting double-digit earnings growth in the two subsequent fiscal years. It expects its fiscal year 2025 dividend growth to mimic its earnings growth for the year and is targeting share repurchases of $3 billion.
Disney had a good run at the box office last year and has a strong lineup for 2025 with titles like Zootopia 2, Captain America: Brave New World, The Fantastic Four: First Steps, and Avatar: Fire and Ash set to release in the new year. The importance of Disney’s box office success cannot be understated and goes way beyond the box office contributions to its earnings. In-house, quality movies add to Disney’s streaming content and make the offering even more valuable for subscribers.
Disney is also looking to launch a direct-to-consumer platform for ESPN in the early fall of 2025. Sports streaming could be among the key growth drivers for Disney going forward. The company’s combined streaming business has turned profitable and it expects its operating income in the current fiscal year to rise by $875 million as compared to fiscal year 2024. Disney expects its streaming business to eventually post double-digit margins like Netflix (NFLX), and while that target might seem a bit lofty, there is a lot of room for Disney to improve that segment’s margins led by pricing actions and higher ad sales. It has also started to crack down on password sharing which could also yield results in the medium to long term.
Disney Stock Price Predictions
Of the 30 analysts actively covering DIS stock, 19 rate it as a “Strong Buy” and 3 as a “Moderate Buy.” The remaining 8 analysts rate Disney as a “Hold” or some equivalent. The stock has a mean target price of $127.23 which is 14.2% higher than the Dec. 31 closing prices. Its Street-high target price of $140 is almost 26% higher.
Disney Stock Looks Like a Buy for 2025
All said, Disney’s current valuations – it trades at 20.5x its expected earnings over the next 12 months – don’t look too demanding given the kind of long-term earnings growth potential that the company brings to the table. While it might share an acrimonious relationship with the incoming U.S. president, its strong fundamentals, reasonable valuations, and expected growth make it a buy for long-term investors.
