Disney Stock Upgrade Cites Streaming Profitability

Raymond James upgraded Walt Disney Co. (DIS) to Outperform on April 1, 2026, following a March 31 report showing stronger streaming profitability and first-quarter revenue. The firm said the company’s valuation and improving streaming margins support its positive outlook.

Streaming Profitability and Q1 Results

Disney reported $26.0 billion in revenue for the first quarter of fiscal 2026. Streaming operating income rose 72.0% year over year to $450 million, reflecting faster margin gains in the direct-to-consumer (DTC) business. The company projects fiscal 2026 streaming operating income of $2.1 billion, a 62.0% increase from fiscal 2025’s $1.3 billion, with an estimated 10.0% DTC margin. Management also expects about $500 million in streaming operating income in the spring quarter, roughly $200 million more than a year earlier. The Experiences segment, which includes parks and resorts, targets revenue growth near 5.0% and is estimated to contribute 57.0% of fiscal 2026 operating income. The company anticipates double-digit earnings per share growth for fiscal 2026 and 2027, reflecting a shift toward higher-margin streaming that affects Disney’s cash flow profile.

Analyst Upgrade and Valuation

Raymond James raised Disney’s rating to Outperform from Market Perform and set a $115 price target. The firm highlighted streaming as the main driver of operating income growth between fiscal 2025 actuals and fiscal 2028 estimates. It described Disney’s valuation as historically cheap, even when tested against adverse macroeconomic and international visitation scenarios. The research cited a 15.0x next-twelve-months price/earnings multiple, a 13.0x NTM levered free cash flow multiple, and a PEG ratio of 0.11. The upgrade does not depend on any single near-term quarter.

The analyst consensus remains moderately bullish, with an average price target of $132.81 from 24 brokers, including 18 Buys, five Holds, and one Sell. Other recent broker moves include Deutsche Bank lowering its target to $132 from $135 and Guggenheim cutting its target to $115 from $140. The upgrade frames Disney as a valuation-driven opportunity based on accelerating streaming profitability, while the broader consensus reflects differing views on the pace of parks and international visitation recovery and their impact on margins and cash flow.