Wells Fargo resumed coverage of Walt Disney Co. (NYSE: DIS) with an Overweight rating and a $159 price target, expressing confidence in the entertainment giant’s diversified asset base, improving operational execution, and long-term earnings visibility.
“We think Disney’s assets are growing and maturing, creating more predictability in EPS upside that will engender a rerating,” the analysts said, adding that a near-term resolution to the company’s CEO succession plans remains “the final critical item” for long-term investors waiting on the sidelines.
The bank characterized Disney as “an Experiences stock with a Media heart,” signalling that the company’s theme parks, resorts, and cruise operations will drive most of its future profit expansion. Wells Fargo expects the Experiences segment to contribute roughly 55% of Disney’s operating income by fiscal 2027, highlighting consistent demand and pricing power across its parks and travel businesses.
Analysts project Experiences operating income growth of 8.4% in FY2025, 11.9% in FY2026, and 8.8% in FY2027, noting that the FY2026 outlook is already tracking ahead of management’s current guidance.
On the cruise front, Wells Fargo expects Disney Cruise Line’s capacity to expand 2.3 times by fiscal 2032, as the company continues to add ships and expand routes. The cruise business is projected to account for about 9% of Disney’s operating income by the end of the decade, with the analysts valuing the unit at roughly $37 billion, based on a 15x enterprise value-to-operating income multiple for the fully built fleet.
Turning to the media side, Wells Fargo said ESPN has become “increasingly de-risked,” forecasting 32 million streaming subscribers by FY2030 as Disney transitions the sports network toward a hybrid direct-to-consumer model. The bank also expects Disney’s direct-to-consumer (DTC) business to deliver about 40% incremental margins over time, driven by pricing optimization, improved cost discipline, and bundling synergies across Disney+, Hulu, and ESPN+.
At current levels, Wells Fargo views Disney’s valuation as “undemanding”, trading at 13x estimated 2027 EBITDA and 20x P/E, while the company’s earnings are forecast to grow at a 14% compound annual rate.
The analysts concluded that execution and earnings consistency will likely serve as the main rerating catalysts, positioning Disney for renewed investor confidence and potential stock outperformance in the coming quarters.
