DIS - Disney Nearing Fair Value With Upside Potential Buy This Dip

2024-05-11 10:00:00 ET

Summary

• DIS has pulled back to $105s at the time of writing, offering interested investors with an improved margin of safety, as the market over-reacts to the management's softer FQ3'24.
• Even so, we believe that its turnaround is already showing great promise, based on the improving balance sheet health and growing D2C/ Experience profitability.
• We expect these to eventually balance the secular decline in DIS' linear TVs, as the media company ramps up its advertising capabilities through the (eventually) integrated Hulu.
• With it trading at fair valuations compared to its peers, we believe that DIS remains a Buy with a promising upside potential over the next few years.

We previously covered Walt Disney Company (NYSE: DIS ) in February 2024, discussing its bottom line beat in the FQ2'24 earnings, the raised dividends, and the reinstatement of $3B in share repurchases for FY2024, resulting in the improving market sentiments surrounding its long-term prospects.

Combined with its inherent undervaluation compared to historical means and the promising FY2024 guidance, we had rated the stock as an excellent Buy after a moderate retracement to its previous trading range at between $90s and $100s for an improved margin of safety....

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