Disney Stock: As Analysts Lower Their Price Targets, Should You Sell?

According to Wall Street, Disney  (DIS) – Get The Walt Disney Company Report is losing its upside potential. In recent weeks, several analysts have downgraded the stock.

But are these lower price targets a signal you should sell the House of Mouse?

We don’t think so. Here’s why.

Figure 1: Disney Stock: As Analysts Lower Their Price Targets, Should You Sell?

Unsplash

(Read more from the MavenFlix: Jim Cramer On Netflix: Latest Results Are Not a Reaffirmation of Growth)

DIS Downgrades

Last week, Wells Fargo reduced its price target on DIS from $153 to $130. But despite this, analyst Steven Cahall remains optimistic about Disney’s stock. He rates DIS as “overweight.”

According to Cahall, the main growth drivers for Disney are Disney+’s expanding subscriber base and the potential launch of an a-la-carte version of ESPN+ that would offer services separately.

Wells Fargo wasn’t the only investment bank lowering its price target for DIS. In recent weeks, we’ve seen near-term optimism for Disney wane among other Wall Street names. For example, Barclays lowered its price target from $130 to $120.

Many of these downgrades are linked to the performance of the market as a whole, which may be headed for a possible slowdown in the second half of 2022.

Therefore, diminished enthusiasm for Disney’s stock is more about macroeconomic factors than the company’s fundamentals.

In addition, it’s worth noting that, even with the price cuts, both Wells Fargo and Barclays still retain price targets with upsides above 20%.

(Read more from the MavenFlix: Netflix Q2 Earnings Review: Better Than Expected)

What the Market Says

According to TipRanks, among 25 analysts who cover DIS, the average price target is $137. This suggests upside potential of around 35% from the current price. On average, the stock is rated a moderate buy.

The highest reported target is $176, which points to gains of over 70%. Such bullish views probably involve Disney leading the streaming industry and parks reopening at full capacity earlier than expected.

The lowest price target is $110, which still points to 10% upside, showing that the market still thinks that DIS is a good investment.

Of all 25 ratings on DIS, 17 analysts point to the stock being a buy, eight indicate a hold, and none recommend that you sell.

Our Take

Disney is an established company that ventures into and challenges new markets with gigantic profit potential. Therefore, we still believe it is a good company to keep in the portfolio.

It’s clear that analysts have lowered their price targets more because of the stock market as a whole than because of a problem with the company itself.

Therefore, analysts should think about the company’s potential before selling DIS.

(Read more from the MavenFlix: 5 Factors to Consider Before Buying Netflix Stock)

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting MavenFlix)

Leave a Reply

Your email address will not be published.