Company Overview
The Walt Disney Company is a leading global entertainment powerhouse with a diversified portfolio spanning content creation, streaming services, sports media, and theme park operations. The company’s competitive advantage lies in its unrivalled intellectual property ecosystem, anchored by globally beloved franchises including Disney Animation, Pixar, Marvel, and Star Wars. This extensive IP portfolio enables Disney to maintain strong consumer engagement across multiple platforms, driving multiple and complementary revenue streams.
Key Investment Highlights
Disney’s strategic positioning centres on three critical factors that underpin its investment appeal. First, the company benefits from a comprehensive entertainment ecosystem that leverages its iconic franchises to drive monetisation at scale, supporting sustainable long-term revenue growth. Second, Disney has successfully demonstrated its ability to adapt to changing consumer preferences by prioritising its direct-to-consumer streaming business while transitioning away from traditional linear television.
Most notably, the streaming segment achieved profitability in the second half of 2024, marking a significant operational milestone.
Primary Growth Driver: Experiences Segment
The Experiences segment serves as Disney’s primary growth engine, accounting for 45% of total revenue and consistently delivering high-single- to low-double-digit year-over-year growth. This segment encompasses theme parks, resorts, and cruise operations, benefiting from resilient attendance patterns and higher per-capita guest spending and effective yield management strategies despite competitive pressures in the entertainment and leisure industry.
Streaming Success and Digital Transformation
Disney’s strategic pivot towards streaming has yielded positive results, with the direct-to-consumer business turning profitable. This achievement reflects the company’s successful adaptation to evolving consumer viewing habits and validates its investment in digital content distribution.
Achieving profitability positions Disney more competitively within an increasingly crowded global streaming landscape and strengthens the overall earnings profile of the group.
Research Recommendation
Phillip Securities Research has initiated coverage of The Walt Disney Company with an ACCUMULATE rating and a target price of US$130.00. The valuation methodology employs a discounted cash flow analysis utilising a weighted average cost of capital of 7.7% and a long-term growth rate of 3.5%. This recommendation reflects confidence in Disney’s ability to leverage its diversified business model and capitalise on the continued global expansion of streaming services alongside the resilient post-COVID recovery of its experiences segment.
Frequently Asked Questions
Q: What is Phillip Securities Research’s recommendation and target price for Disney?
A: Phillip Securities Research initiated coverage with an ACCUMULATE rating and target price of US$130.00, based on a DCF analysis using a 7.7% WACC and 3.5% growth rate.
Q: What makes Disney’s intellectual property ecosystem unique?
A: Disney possesses an unrivalled IP ecosystem anchored by major franchises including Disney Animation, Pixar, Marvel, and Star Wars, which supports strong consumer engagement across platforms and enables monetisation at scale.
Q: Which segment is Disney’s primary growth driver?
A: The Experiences segment is Disney’s primary growth driver, contributing 45% of revenue and delivering consistent high-single to low-double-digit year-over-year growth through theme parks, resorts, and cruise operations.
Q: When did Disney’s streaming business become profitable?
A: Disney’s streaming segment turned profitable in the second half of 2024, marking a significant milestone in the company’s digital transformation strategy.
Q: How has Disney adapted to changing consumer viewing habits?
A: Disney has prioritised its direct-to-consumer streaming business while transitioning away from linear television, successfully adapting to evolving consumer preferences in entertainment consumption.
Q: What factors support the Experiences segment’s strong performance?
A: The Experiences segment benefits from resilient attendance, higher per-capita guest spending, and effective yield management strategies, maintaining strong performance despite competitive pressures.
Q: What is Disney’s strategic positioning for long-term growth?
A: Disney is well-positioned to monetise its IP at scale through continued global streaming expansion and the resilient post-COVID recovery of its experiences segment, underpinning long-term revenue growth.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
Disclaimer
These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products.
Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance.
Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries.
The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.
Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
