Disney stock could ‘surpass prior peak earnings’, says Morgan Stanley analyst

The Walt Disney Company (NYSE: DIS) has taken significant losses in 2022, and sadly for market participants, they are not the only ones who have been affected by this. On the other hand, it presents prospective entry points for investors seeking to buy and hold a solid company for the long term.

Morgan Stanley (NYSE: MS) analyst, Benjamin Swinburne noted that Disney is priced below the price it traded at when it launched its Disney+ streaming service, and despite macro pressures on the stock, he believes the price is attractive and rates them ‘overweight’.

“Led by its Parks & Experience segment and with the benefit of a still young streaming business scaling to profitability, we see 20-25% adjusted EPS growth over the next three years.” 

He also added:

“The streaming transition of Disney’s entertainment content has been highly accretive to revenues but highly dilutive to earnings. We believe it can recover and ultimately surpass prior peak earnings over time, but more importantly that its content is undervalued at current share prices.”

DIS chart and analysis 

Meanwhile, shares of the company are down over 39% year-to-date (YTD), staying in a continuous momentum downward since November 2021. Recent trading sessions have seen the shares close below all daily Simple Moving Averages (SMAs), trading near the pandemic lows when worries around the parks and cruise part of the business were at its highest. 

Similarly, analysts rate the shares a moderate buy, with average next 12 months price predictions at $144.61, 53.19% higher than the current trading price of $94.40.

Despite all of the headwinds that are facing the global economies, it seems that pockets of value can be found. Namely, Swinburne lowered its price target on DIS to $125, which implies he sees an upside of over 30% from the current price. 

Market participants are apparently given solid buying opportunities in difficult market conditions, and according to Morgan Stanley, Disney is one of them. 

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