Sign InWalt Disney Company's Technical Analysis Suggests Modest Potential Gain Amidst Challenges
Summary
As of August 25, 2023, The Walt Disney Company's stock price may experience slight upward movement in the next trading day due to being oversold and potential positive news about collaboration with Amazon, but significant gains may not be imminent within the week due to increased streaming competition and reputational challenges, making it a reasonable 'Hold' with a potential leaning towards 'Buy' stock.
Technical Analysis
As of August 25, 2023, The Walt Disney Company (DIS) had a last close price of $83.36, reflecting a change of 1.08%. Its price ranged from a low of $82.46 to a high of $83.64 in the same period. For the year, the price has varied between a low of $82.46 and a high of $118.37.
DIS has a market cap of $158.74 billion with an average volume of around 15.44 million. The volume recorded on the last trading day was roughly 14.88 million, lower than the average. The total outstanding shares amount to 1.90 billion. The company’s 50-day moving average is $87.92, reflecting a bearish trend given the current price is less than this benchmark. The 200-day moving average is $94.85, supporting this negative outlook.
Turning to the key technical indicators; the Relative Strength Index (RSI14) is around 40, implying that DIS is near the oversold threshold. The Moving Average Convergence Divergence (MACD) for a 3-month span stands at 0.288632, indicating potential for upward price momentum. As for price volatility, the Average True Range (ATR) stands at 2.05.
DIS appears to have a support level at around $82.47 and resistance at $85.56. If the stock breaks below its support, it could continue towards new lows. Yet, if it breaks its resistance, it could experience a bullish reversal.
Fundamental Analysis
Company fundamentals suggest that the EPS for the Disney company is $1.18, resulting in a relatively high Price-to-Earnings (PE) ratio of 70.64. This high PE ratio indicates investor expectation for higher future earnings, despite current sluggish performance.
The recent announcement about Disney's talks with Amazon for an ESPN streaming service could present a potential opportunity for collaboration and revenue growth. However, DIS is currently suffering reputational challenges over its progressive orientation, and there are concerns about declining Disney+ subscribers due to increasing competition.
The consensus for DIS among analysts is "Buy" with the majority endorsing this sentiment. The expected low and high price targets are $94 and $263 respectively, with a consensus of $157.07. This suggests a positive outlook despite current struggles. However, the discounted cash flow (DCF) sits at $89.72, which is marginally above the current price, suggesting the stock may be slightly undervalued or potentially fairly priced.
Predicted Performance
Based on the fundamentals and technicals above, one might expect some slight upward movement in the price in the next trading day, given its oversold position and potential positive news about the collaboration with Amazon. However, considering macro factors like increased streaming competition and reputational hits, more significant gains might not be imminent within the week.
Evaluation and Rating
Considering the current technical and fundamental factors surrounding DIS, it would be reasonable to categorize the stock as a 'Hold' with a potential leaning towards 'Buy'. The technical indicators suggest potential for a modest gain, and the valuation from the DCF also slightly supports this. The significant competition challenge and reputational hits however present some uncertainties. Investors may seriously consider these factors and watch for more positive news, such as the Amazon collaboration, to crystalize before making a 'Buy' decision.
