Disney Upgraded to Buy at Seaport Due to Improved Macroeconomic Conditions

Seaport Research has upgraded Walt Disney Company (NYSE: DIS) to a Buy rating, with a price target of $108 for the stock, as announced in a note on Monday.

This upgrade signifies a change in the firm’s perspective on Disney, as Seaport analysts highlighted improved macroeconomic conditions and emerging profitability within Disney’s direct-to-consumer (DTC) segment.

The analysts acknowledged their earlier misjudgment of Disney’s potential, stating, “This is a mea culpa on our outlook for DIS now that there are better macroeconomic underpinnings to the story.”

Earlier this summer, the firm had downgraded Disney, reacting to market declines and concerns regarding stagnant park attendance and a drop in operating income. They also noted that increased investments in technology and platforms related to the DTC segment had prompted them to lower their fiscal 2025 profitability forecasts.

However, Seaport has now revised its stance, citing an unexpectedly positive economic outlook. “We are now upgrading DIS shares on the better macroeconomic outlook going forward (better than a soft landing),” the analysts observed.

Additionally, they pointed out the market’s positive reception of Disney’s current park demand and the potential for further growth in the DTC segment.

Although Seaport acknowledged that the Parks segment has presented “tangibly soft” data, they believe this to be a temporary situation. Furthermore, they foresee additional revenue opportunities from Disney’s DTC operations, buoyed by recent price hikes and the introduction of paid sharing, which could enhance average revenue per user (ARPU) and subscriber growth.

Seaport’s updated outlook reflects a confident expectation for Disney’s ability to leverage its existing demand and drive profitability in both the Parks and DTC segments, resulting in the upgraded rating and new price target of $108.