Sign InDisney stock faces short-term risk, but long-term prospects suggest a 'Hold' for investors.
Summary
The analysis on The Walt Disney Company's stock suggests that there may be short-term downward pressure due to negative business fundamentals and bearish technical indicators, but in the long run, the stock is undervalued and has potential for rebound based on analyst target prices, making it a 'Hold' for long-term investors. (Analysis conducted on September 1, 2023)
Company Overview
The subject of analysis is on the stock of The Walt Disney Company (Ticker: DIS) which trades on the New York Stock Exchange (NYSE). Walt Disney is a leading entertainment company, known for its film production, cable networks, broadcasting, and theme parks.
Fundamental Analysis
The recent news has painted a negative picture for Disney. Reports suggest that Disney's business model may be in question. There has been a decline in profitability due to low ticket sales for films and challenges in the company's streaming division, which includes Disney+. It has also been reported that Disney's relationship with its cable TV partners has been strained, which could potentially further impact its financial situation.
The company has reported earnings per share (EPS) of $1.23 and a relatively high Price to Earnings (PE) ratio of 66.37 suggesting the market has been willing to pay a premium for Disney given its strong brand and diversified revenue sources. Disney has a market capitalization of $149.38 billion and 1.83 billion outstanding shares.
Technical Analysis
Disney's stock closed at $81.64 on September 1, 2023. Its price ranged from a low of $80.53 to a high of $82.23 on that trading day. The stock underwent a negative change of -2.04, representing a -2.44% decrease, which is not favorable. The stock is currently trading significantly below the 50-day moving average of $87.21 and well below the 200-day moving average of $94.59, indicating a currently bearish pattern.
Combining this with a low Relative Strength Index (RSI14) value of 18 (which shows oversold conditions), the technical indicators appear negative. A MACD of -0.6012 additionally supports a bearish trend. The analysis also shows the absence of a support level, and a resistance at $82.47, further implying potential downside.
Analyst Recommendations and Financial Models
According to surveyed analysts, the consensus about Disney's stock is a "Buy" - with 17 buys, 3 holds, and 1 sell. The stock has been given a Discounted Cash Flow (DCF) value of $88.00, which is significantly higher than the current stock price. The consensus target price stands at $157.07, with a high target of $263 and a low target of $94.
Stock Predictions
Taking both the fundamental and technical analysis into account, the stock price may experience continued downward pressure in the short term, especially considering the bearish trend and the lack of support level. However, in the longer term and based on the DCF and analyst target prices, the stock appears undervalued, and as current challenges are resolved, it may rebound.
Therefore, the predicted stock price for the next trading day, September 5, 2023, might continue to see a downward trend given the prevailing sentiment. However, for the upcoming week, the stock could possibly show signs of stability and begin to rebound based on the "Buy" consensus among analysts.
Final Evaluation
In light of the negative sentiment surrounding the business fundamentals, combined with the bearish technical indicators, there could be short-term risk for investors. However, considering the long-term prospects of the company and its historically resilient nature, alongside its current undervaluation indicated by the DCF and analyst target prices, Disney's stock could be considered as a 'Hold' for long-term investors.
It is important to note, however, that investors should monitor the situation closely and consider other macroeconomic factors and broader market trends that can impact the company's performance.
