In a shortened trading week, Disney’s DIS The shares made headlines on Monday after hitting their 52-week high, fueled by an analyst upgrade at Barclays BCS.

Cost-cutting initiatives have paid off, with Disney reinstating its dividend late last year after delaying its payout during the pandemic.

Investor sentiment for Disney stock was once again high, with DIS up +3% today and now rising +31% through 2024, outperforming many of its Zacks Media Conglomerate Industry peers, including Paramount Global PARAA and Madison Square Garden Entertainment MSGE.

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Barclays upgrade

Shares of Disney were upgraded to overweight from equal weight by Barclays on the view that the multimedia conglomerate is likely to see positive earnings revisions to support its valuation after performing strongly so far this year.

Most recently, Disney’s first-quarter earnings guidance in early February exceeded first-quarter earnings expectations of $1.22, crushing the Zacks Consensus of $0.97 per share by 26%, rising from $0.99 per share in the comparative quarter.

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Barclays raised its price target for DIS from $95 to $135, indicating a 13% upside from current levels of $119 per share. While Barclays isn’t listed as one of the 24 brokerages covering Disney’s stock offering proprietary data to Zacks, it’s worth noting that DIS already passed its average Zacks price target of $112.81.

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Earnings estimate revisions

Notably, the Zacks Media Conglomerates Industry is currently in the top 27% of the 250+ Zacks industries, with Disney joining Paramount Global and Madison Square Garden in receiving positive earnings estimate revisions.

While not as compelling as the recent upward revisions from Paramount Global and Madison Square Garden, Disney’s FY 2024 EPS estimates are up 4% over the past 60 days, while FY25 EPS estimates are up 2%.

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Additionally, Disney’s earnings are now expected to rise 21% this year and are expected to rise another 19% in FY25 to $5.47 per share.

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Valuation and cost savings initiatives

Thanks to cost-cutting initiatives since CEO Bob Iger’s return in 2022, Disney’s long-term debt has fallen to $42.1 billion, down from highs of $52.91 billion in 2020.

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Regarding rising earnings expectations benefiting Disney’s P/E valuation, DIS trades at a forward earnings rate of 25.3x, which is well below the 10-year high of 134.3x and closer to the median of 21x. However, Disney stock is trading above the industry average of 22.5x and the S&P 500’s 22x.

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Dividend restored

Following Disney’s reinstated dividend, it will now pay a semi-annual dividend of $0.45 per share following strong first-quarter results, which is 50% higher than the first post-pandemic payout of $0.30 per share in early January. The ex-dividend date is July 5 and is payable on July 25.

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Takeaway

The turnaround in Disney’s stock has been very impressive, and DIS currently sports a Zacks Rank #3 (Hold) after such an extended YTD rally. That said, investors may still be rewarded in the longer term, although better buying opportunities may lie ahead.

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The Walt Disney Company (DIS): Free Stock Analysis Report

Barclays PLC (BCS): Free Stock Analysis Report

Madison Square Garden Entertainment Corp. (MSGE): Free Stock Analysis Report

Paramount Global (PARAA): Free Stock Analysis Report

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