Should You Buy Disney Stock as Streaming Finally Gains Traction?

As consumers increasingly abandon traditional TV cable in favor of online streaming platforms, the entertainment industry is undergoing a major transformation. This "cord-cutting" revolution has fueled unprecedented growth in the industry, with the global video streaming market estimated to reach $416.84 billion by 2030, expanding at a 21.5% CAGR.

Among the major players, Walt Disney Company (DIS) is emerging as a leader, having funneled significant resources into its streaming operations over the past few years – a move that’s now yielding impressive returns. Last week, the company's earnings release showcased a decisive turnaround in its direct-to-consumer (DTC) streaming division, cementing Disney’s position as a formidable player in this rapidly evolving space.

With DIS stock rebounding post-earnings and analysts voicing optimism, is this entertainment titan, with its streaming momentum and dividend appeal, poised for a breakout as streaming takes center stage?

About Walt Disney Stock

The Walt Disney Company (DIS) is a global entertainment giant based in Burbank, California. With Pixar, Marvel, and Lucasfilm under its belt, Disney’s legacy extends from classics like The Lion King to Frozen and Star Wars - and with its massive empire in movies and TV, Disney is making waves in streaming, competing head-to-head with Netflix, Inc. (NFLX) and Amazon (AMZN) Prime Video.

From theme parks to merchandise, Disney continues to shape culture globally, blending nostalgia with innovation to captivate audiences worldwide. As an entertainment cornerstone, its influence keeps growing, as evidenced by successes like Inside Out 2. Its market cap currently stands at $203.5 billion.

Disney has had its ups and downs this year, dropping 7.6% from its March high of $123.74. Lately, the House of Mouse has been on the rise. A 17.5% surge over the past month and an 11% rally in the past week, fueled by a stellar Q3 earnings report, shows that DIS is clawing its way back to the top. Year-to-date, the entertainment giant’s shares are up 26.6%, outshining the broader S&P 500 Index’s ($SPX)24% gains.

After a three-year hiatus, Disney reignited its dividend payout, starting at $0.30 per share in January. By July 25, that payout jumped 50% to $0.45 per share, reflecting a 0.78% yield.

Disney’s forward price/earnings ratio sits at a reasonable 20.49x, well below Netflix's inflated 42.33x and its own five-year average of 42.19x.

Walt Disney Beats Q4 Earnings Estimates

On Nov. 14, Disney delivered an impressive Q4 earnings report, topping Wall Street’s bottom-line forecasts, and the stock soared 6.2%. The entertainment giant generated $22.57 billion in revenue, marking a solid 6% year-over-year jump, in line with expectations. Disney's adjusted EPS shot up 39% to $1.14, easily beating analysts' estimate of $1.09. 

The real story, however, was the streaming business - a segment that went from a financial anchor to a booming profit engine. Disney+ alone raked in over 122.7 million subscribers outside of India, up by 4.4 million from the previous quarter, and streamed its way to profitability. 

Hulu and ESPN+ joined the party, producing a combined $321 million operating profit and marking the second consecutive quarter of positive returns, a sign that the streaming shift is paying off.

The entertainment DTC segment also saw 14% growth in ad revenue, contributing to $253 million in operating income. All of this was backed by blockbusters like Deadpool & Wolverine, which pulled in $1.3 billion globally, and Inside Out 2, pushing Disney+ subscriptions through the roof as fans revisited earlier installments.

Despite some struggles with theme park attendance and ESPN’s rising costs, Disney’s streaming wins more than made up for it, proving that its shift toward digital dominance is real. CEO Bob Iger’s announcement of adding ESPN to Disney+ on Dec. 4 is another shot across the bow. The move, promising live sports and personalized experiences, is set to push Disney’s streaming empire even further, ready to reshape the way sports fans consume content.

Disney provided robust earnings guidance, building on its strong performance. For fiscal 2025, the company is targeting high-single-digit adjusted EPS growth and a robust $15 billion in cash from operations. With $8 billion earmarked for capital expenditures and $3 billion for stock repurchases, Disney is poised to reinvest in its future, while dividend growth will align with earnings. A key highlight is its expectation of double-digit operating income growth in Entertainment, including an $875 million boost in DTC operating income.

While Disney usually keeps its long-term projections under wraps, this earnings report signals a confident outlook all the way through 2027, projecting double-digit EPS growth in fiscal 2026 and 2027. Investments in theme parks, cruise ships, and streaming are set to pay off, fueling the company’s next phase of expansion.

Analysts tracking Walt Disney expect the company to report a profit of $5.14 per share in fiscal 2025, up 3.4% year-over-year, with further growth of 12.5% to $5.78 per share in fiscal 2026.

What Do Analysts Expect for Disney Stock?

Disney’s earnings report sparked a wave of bullish moves from brokerage firms. Wells Fargo’s Steven Cahall boosted his price target to $138 from $116, with an “Overweight” rating, while Morgan Stanley hiked its target to $125 from $110, reaffirming a “Buy” rating. Bank of America was even more optimistic, raising its target to a Wall Street high of $140 from $120, and reiterating its “Buy” rating.

Meanwhile, Evercore ISI boosted Disney’s price target to $134, betting on its comeback story. With Parks thriving and DTC profits rising, the brokerage firm sees Disney+ and Hulu’s margin growth and robust FCF by 2027 as game-changers. At 22x its 2026 EPS estimate, Evercore sees Disney poised for a breakout toward $150.

DIS has a consensus “Strong Buy” rating overall. Of the 29 analysts covering the stock, 19 advise a “Strong Buy,” three recommend a “Moderate Buy,” and the remaining seven analysts suggest a “Hold.”

The average analyst price target of $125.92 indicates a potential upside of 10.2% from the current price levels.