Disney recent share weakness an opportunity, says Morgan Stanley

Morgan Stanley analyst Benjamin Swinburne says Disney’s Q2 results were modestly ahead of expectations, driven by the first profitable DTC segment quarter since Disney launched streaming. While the firm’s FY24 adjusted EPS forecast comes up 2%, it lowers its FY25 adjusted EPS by 2%-3% due to higher than expected wage pressure at U.S. Parks and slower DTC advertising growth and its FY26 adjusted EPS view comes down by about 5% as it attempts to capture the lower game count and higher year-one step up from the reported NBA renewal at ESPN. Though Disney is “not immune to a weaker consumer,” the firm sees recent share weakness as an opportunity and keeps an Overweight rating and $135 price target on Disney shares.