Sen. Elizabeth Warren has set her sights on Disney (DIS). She is urging the Department of Justice to take a hard look at Disney’s plan to merge Hulu + Live with Fubo TV (FUBO), raising alarms over potential antitrust violations. The deal, if approved, could hand Disney even greater market share, making it easier to raise prices and tighten its grip on the streaming industry.
Disney’s history of aggressive expansion has repeatedly drawn accusations of stifling competition. But, despite the noise, the company stands strong. Disney has weathered countless regulatory challenges before, emerging even large each time. With an unmatched content empire and a global fanbase, it remains a force to be reckoned with. Yet, with regulators on high alert now, what should be investors’ next move?
About Disney Stock
Disney (DIS), headquartered in Burbank, California, is an entertainment powerhouse that commands a market capitalization of around $200 billion, shaping global culture with its legendary film studios, iconic theme parks, influential media networks, and an ever-expanding streaming empire that includes Disney+, ESPN+, and Hulu.
But, despite the company’s massive popularity and global fanbase, the iconic entertainment giant found itself in choppy waters last year, battling fierce streaming competition, rising costs, a wary consumer base, and persistent challenges in its traditional media networks. While the broader S&P 500 Index ($SPX) returned roughly 17.5% over the past year, Disney’s stock delivered a lackluster 3.9% gain during the same stretch.
Despite these challenges, Disney’s valuation suggests it could be a hidden gem for value seekers. The stock is trading at a modest 20 times forward earnings and 2.2 times sales, a stark contrast to industry heavyweight Netflix (NFLX), which trades at 40.82 times forward earnings and 11 times sales.
Disney Surpasses on Q1 Earnings
On Feb. 5, the company announced better-than-expected results for the first quarter of its fiscal 2025, which ended on Dec. 28, 2024. Revenue increased by 5% year-over-year to $24.7 billion, narrowly edging past Wall Street’s forecast figure. The stronger performance extended to earnings as well. First-quarter EPS came in at $1.76, marking an impressive 44% rise from $1.22 a year earlier and coming in above the expected $1.44.
Disney’s streaming business continued to shine, delivering another profitable quarter despite a slight 1% sequential dip in Disney+ subscribers. The platform saw a modest 1% bump in domestic subscriptions compared to the final quarter of fiscal 2024, showcasing resilience in its home market. However, international markets presented a challenge, with subscriptions slipping by about 2% sequentially.
Looking ahead, Disney anticipates continued growth, with management projecting high-single-digit adjusted EPS growth for the current fiscal year. The entertainment powerhouse also expects to generate a hefty $15 billion in operating cash flow for the entire year. A key factor in its fiscal 2025 outlook is its focus on expanding and improving the profitability of its streaming business.
The company plans to invest further in content, strengthen its intellectual property portfolio, and expand its reach in international markets. On the other hand, analysts tracking Disney project the company’s EPS for fiscal 2025 to grow by 10.1% year-over-year to $5.47, while fiscal 2026 is expected to see another 12.1% year-over-year improvement, reaching $6.13.
What Do Analysts Expect for Disney Stock?
Disney’s streaming business continues to be a major strength, attracting both viewers and investors. A recent report highlights that Disney’s streaming bundles are proving even more resilient than its rivals, reinforcing its strong position in the market. This confidence is reflected in analysts’ rising price targets.
Despite looming regulatory hurdles, Wall Street remains largely bullish on DIS stocks, with a consensus “Strong Buy” rating overall. Among 29 analysts covering DIS, 20 advocate a “Strong Buy,” while two recommend a “Moderate Buy.” Meanwhile, seven suggest a “Hold.” DIS’ average analyst price target of $129.35 represents potential upside of 16.2%, while the Street-high target of $147 suggests that the stock can climb as much as 32.2% from here.
