By Angela Palumbo
Walt Disney stock could bounce if the company focuses the next chapter of growth on its media business, Needham says.
Analyst Laura Martin wrote in a research note Tuesday that Disney stock is trading like a cruise ship company, not a media company.
Disney is currently trading at 13.7 times earnings over the next 12 months, which is a drop from its five-year average of 27.4 times. Meanwhile Carnival trades at 10.5 times forward earnings, Royal Caribbean Group trades at 14.4 times, and Norwegian Cruise Line Holdings trades at 7.6 times.
In comparison, streaming giant Netflix trades at 28.5 times forward earnings.
Disney does have its own cruise line, which it has committed to growing as the segment performs well. But Martin believes that "a key potential catalyst in FY26 [fiscal year 2026] is if DIS can convince Wall Street that DIS is still a media company, which could double its multiple and share price," She rates Disney as a Buy with a $125 price target.
Disney stock was up 0.3% on Tuesday to $94.59. Shares have dropped 17% this year.
Wall Street is waiting to see whether or not new CEO Josh D'Amaro can lead the company into a new era. D'Amaro was the experiences chairman when he was picked to take over Disney's helm from Bob Iger. Some investors are worried that someone with a background in theme parks and cruise lines might struggle to lead the businesses media segment into the future.
That's particularly concerning as the streaming environment grows more competitive, linear TV viewership continues to drop, and Disney struggles to get people excited about new film projects.
Martin says there are a few ways Disney can prove to Wall Street that its stock is worth trading at a valuation that's in line with its media peers. This includes committing to expanding streaming margins, launching streaming bundles to limit the amount of people potentially canceling their subscriptions, and releasing more hit movies at the box office that could convince people to sign up for streaming services.
"When DIS was considered a Media company, it traded >20x earnings (similar to the S&P 500 avg today). Closing this multiple gap is a key upside value driver," Martin said.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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(END) Dow Jones Newswires
March 31, 2026 12:08 ET (16:08 GMT)
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