Sign InAnalysis of The Walt Disney Company (DIS): Potential Upside Despite Bearish Sentiments
Summary
The Walt Disney Company (DIS) is facing obstacles such as potential labor issues and challenges in transitioning to digital streaming, leading to a bearish sentiment and a Hold evaluation, although potential for an upward reversal exists with oversold status and successful digital transition; investors should be cautious due to ongoing uncertainties. (Analysis conducted on July 25, 2023)
Analysis of The Walt Disney Company (DIS)
Fundamental Analysis
The Walt Disney Company (DIS) operating on the New York Stock Exchange, last closed at $85.63 on July 25, 2023, demonstrating a decline of -1.12%. The current market capitalization of the company stands at around $156.47 billion with 1.83 billion shares outstanding.
The company has an earnings per share (EPS) of $2.23 and a price-earnings (PE) ratio at 38.4, signaling expensive stock compared to its profitability. Despite the relatively high valuation, the discounted cash flow (DCF) analysis indicates a value of $91.99 per share, suggesting some potential upside.
Disney is experiencing some obstacles as evidenced by the latest news. The company faces potential labor issues with actors and writers striking from their contracts, leading to criticism against the CEO. Industry transitions from cable to digital streaming are also posing challenges, as is evident from the statement of ESPN chairman. This transition, though difficult, indicates a potential upward boost for Disney if handled well. These factors are likely contributing to a bearish sentiment as noted by the analyst warning of a negative tipping point.
Technical Analysis
Disney’s performance under technical indicators suggests a bearish trend. The Relative Strength Index (RSI14) currently at 35, nearing the oversold threshold. This may indicate upward corrective movement in the near future, depending on market sentiments.
The Moving Average Convergence Divergence (MACD) at -0.98 also points towards a short-term bearish phase. Furthermore, the stock's price is below both the 50-day moving average ($89.90) and the 200-day moving average ($96.37), further suggesting a downward trend.
However, the daily volume of 15.17 million compared to the average volume of 14.50 million reveals there's heightened interest in the stock, suggesting potential volatility.
Stock Price Predictions
Despite the bearish sentiments, some analysts provide a brighter picture for Disney. Their consensus target price sits at $159.07, with a high target of $263 and a low target of $105. Given the current technical and fundamental situation, it seems the low target is more feasible in the short term.
The Final Evaluation
Considering all the technical and fundamental analysis, as well as the latest news hitting the market, the final evaluation for Disney falls under 'Hold'.
While the company has faced certain difficulties leading to a bearish trend, potentials for an upward reversal exist due to its oversold status and the prospect of successful transition to digital platforms. Furthermore, the DCF value suggests potential intrinsic value higher than its current market price. Therefore, the stock might be suitable for long-term investors willing to weather short-term volatility.
However, investors must watch out for the ongoing labor issues and the broader transition from cable to digital platforms, as these developments could significantly impact the stock price in both directions. Due to these uncertainties, immediate buying or selling may not be the most prudent action.
