Citi analysts, who resumed covering the stock with a "Buy" rating, believe that the Walt Disney Company (NYSE:DIS) offers an alluring risk-reward opportunity at current levels.


Disney is expected to expand its adjusted profits per share (EPS) by roughly 8% in fiscal 2025, 11% in 2026, and 13% in 2027, according to Citi. Disney's guidance of high single-digit EPS growth in FY25 and double-digit growth in the following years is in line with these projections.

Citi's FY25 and FY26 EPS projections of $5.35 and $5.95, respectively, are still somewhat below Street projections, representing a 2% and 4% shortfall.

Citi has set a $125 target price for the shares.

One of Disney's primary growth engines, according to the analysts, is its direct-to-consumer (DTC) streaming business, which is predicted to achieve EBIT margins of about 10% by 2027.

Citi anticipates adding 8 million subscribers in FY25, 7 million in FY26, and 6 million in FY27, coupled with a modest yearly improvement in average revenue per user (ARPU) of 2-4 percent.

Additionally, according to a note from analysts, the merger of Hulu Live with Fubo, which is scheduled to finish by fiscal Q3 2026, is expected to provide $140 million in annual synergies.

In the meanwhile, Citi predicts that a 20% rebound in the U.S. box office in FY25 will help Disney's Entertainment division.

According to Citi, in the negative scenario, Disney's valuation may drop to $96 per share due to possible economic challenges or heightened competition. A optimistic scenario, on the other hand, predicts higher-than-anticipated ARPU growth and a more advantageous value, which would propel shares to $134.

With analysts pointing to the company's shift to streaming profitability and investments in theme parks and cruise ships as growth drivers, Citi's target price suggests a 15% increase from Disney's current share price of $108.70 as of January 21.