Why Raymond James sees Disney stock as undervalued

Shares of Walt Disney rose modestly on Wednesday as analysts turned more constructive on the media and entertainment giant, arguing that its current valuation presents an attractive entry point despite ongoing macroeconomic and operational challenges.

Raymond James upgraded Disney to outperform from market perform, assigning a price target of $115, after conducting a series of stress tests on the company’s financial outlook.

Even under more pessimistic scenarios, the firm found the stock to be historically inexpensive.

Analysts see value despite macro headwinds

Raymond James analysts noted that Disney is operating in a volatile macroeconomic environment and facing weaker international visitation trends.

However, they believe these pressures are already reflected in the stock price.

The analysts concluded that investors currently have an opportunity to invest “at a very attractive valuation.” They also expect tailwinds to support earnings growth in the latter half of fiscal 2026.

The leadership transition is another focal point. “We are excited to see what Josh D'Amaro brings to the table as the new CEO,” the analysts add, noting they are encouraged by D'Amaro's enthusiasm around technology and interactive entertainment.

Valuation gap raises questions about market positioning

Needham analyst Laura Martin echoed the view that Disney’s valuation does not fully reflect its core business strengths.

In a research note, she argued that the stock is being valued more like a travel and leisure company than a media business.

“Disney stock is trading like a cruise ship company, not a media company,” Martin wrote.

Currently, Disney trades at 13.7 times forward earnings, significantly below its five-year average of 27.4 times.

By comparison, cruise operators such as Carnival, Royal Caribbean Group, and Norwegian Cruise Line Holdings trade at 10.5, 14.4, and 7.6 times forward earnings, respectively.

Meanwhile, Netflix trades at a much higher 28.5 times forward earnings.

Martin believes this valuation disconnect presents a significant opportunity. “a key potential catalyst in FY26 [fiscal year 2026] is if DIS can convince Wall Street that DIS is still a media company, which could double its multiple and share price,” she said.

She rates the stock a Buy with a $125 price target.

Path to re-rating hinges on media execution

Investor focus is now turning to whether Disney can reposition itself in line with its media peers.

Concerns persist about CEO Josh D’Amaro’s background in theme parks and cruise operations, particularly as the company navigates a rapidly evolving media landscape.

The challenges are substantial. Streaming competition is intensifying, linear television viewership continues to decline, and Disney has struggled to generate excitement around new film releases.

Martin outlined several steps that could help shift investor perception. These include improving streaming margins, launching bundled offerings to reduce subscriber churn, and delivering more box office hits to drive engagement with its streaming platforms.

“When DIS was considered a Media company, it traded >20x earnings (similar to the S&P 500 avg today). Closing this multiple gap is a key upside value driver,” Martin said.

Disney shares were up 1.16% in pre-market trading at $97.50, though the stock remains down 13% year to date.