Analysts at Jefferies recently upgraded Disney (DIS) stock to a “Buy” while hiking their price target to $144 from $100. In a recent note, the firm stated that Disney's line of new cruise ships, increased cruise bookings, strong content slate, and high direct-to-consumer margins will be growth enablers for the company.
Disney is finally finding its footing again with CEO Bob Iger back at the helm, with DIS stock already up 11.4% on a YTD basis, commanding market cap of $222.9 billion.
So, is Jefferies’ optimism around DIS stock based on sound assumptions, or is it misplaced? I believe Disney is on the correct path, and investors in the stock will be richly rewarded. Here’s why.
Improving Financials
Disney continues to show clear signs of regained momentum under the leadership of Bob Iger, with its recent financial performance suggesting that the strategic overhaul initiated since his return is beginning to bear fruit. Since resuming the CEO role, Iger has overseen a marked improvement in fundamentals.
In the second quarter of its fiscal 2025, the company delivered a notable beat on the top line, with revenue rising 7% year-over-year to reach $23.6 billion. Earnings per share climbing to $1.81, well above analyst projections, and a sharp improvement from a loss of $0.01 per share in the same quarter last year.
Cash generation was standout too. Operating cash flow came in at $6.8 billion, significantly higher than the $3.7 billion recorded during the comparable period a year ago. Free cash flow more than doubled as well, increasing from $2.4 billion to $4.9 billion. Overall, Disney ended the quarter in a stable liquidity position, with $5.85 billion in cash on hand, underscoring the improved financial resilience of the business.
With improving fundamentals, robust cash generation, and a revitalized leadership strategy, Disney appears well-positioned to reassert its dominance across the evolving media and entertainment landscape.
Strategic Drivers
In a recent piece, I analyzed how Disney’s recent deal with Amazon (AMZN) will act as a boost for its advertising business, while also highlighting the company’s initiatives to streamline its digital offerings and grow its physical footprint.
Notably, Disney’s streaming division is poised to be a major engine of growth, particularly with the strategic consolidation of Hulu and live sports content into Disney+. This integration has significantly enhanced the value proposition for subscribers, resulting in reduced customer attrition and heightened user engagement. The move not only strengthens the recurring revenue base, but also supports operational leverage through increased scale and streamlined content delivery. Encouragingly, management sounded confident about further upside in the near term from advanced personalization tools and locally relevant programming in international markets, which should provide a lift to average revenue per user and aid geographic expansion.
Turning to the cruise business, which has been a central element in Jefferies’ positive stance on the stock, the narrative is one of high-margin experiential growth. The addition of new ships combined with elevated pricing on premium offerings is enhancing both revenue mix and unit-level profitability. Notably, the launch of the Disney Treasure has already received exceptional feedback and robust early bookings, setting the tone for continued momentum as more vessels enter the fleet in the coming years.
At the same time, Disney is investing heavily to strengthen its Experiences segment, with over $30 billion allocated for capital expansion across its theme parks in Florida and California. This investment aims to scale park capacity while maintaining the high-quality guest experience that underpins long-term brand loyalty. Among upcoming developments are a dedicated Monsters Inc. themed land within Hollywood Studios at Walt Disney World and a new expansion area in Frontierland at Magic Kingdom inspired by the Cars franchise.
Finally, Disney holds one of the most iconic and commercially potent collections of intellectual property globally, spanning franchises such as Marvel, Star Wars, and classic characters like Mickey Mouse. This legacy provides a distinct competitive edge, as it enables ongoing monetization with significantly lower brand-building requirements. Crucially, each of these properties brings with it a deeply loyal fanbase, which means that new content releases across film or television formats are almost certain to attract substantial viewership, giving Disney a meaningful advantage in a highly competitive content landscape.
Analyst Opinions on DIS Stock
Overall, analysts have attributed a rating of “Strong Buy” for Disney stock with a mean target price of $129.38, which denotes upside potential of about 4% from current levels. Out of 29 analysts covering the stock, 22 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and five have a “Hold” rating.
