Position #3 – WALT DISNEY CO (THE) – 10.08.2023
LIMIT BUY @ 90 USD
TP @ 140 USD (55.56%)
SL @ 78 USD (-13.33%)
Technical Analysis
DIS stock has just bounced off an important 5-year support zone, confirming short-term EMA20 support on the daily. During today’s session there were good upside volumes that took prices above the EMA50. The threshold to be recovered is the EMA200 on the weekly (now at 91.65 USD), above which I expect a sudden rise towards 100/120 USD. First support in the 85 USD area, where there seems to be very good demand. After that, critical support is found in the 78 USD area (where I placed the SL for this position). This is a 2014 low!
Fundamental Analysis
Disney’s financial health is solid. The debt load has increased because of the Fox acquisition and pandemic-related cash flow challenges. The firm ended September 2022 with $48 billion in total debt outstanding, which equals 3.2 times adjusted fiscal 2022 EBITDA, an acceptable level for a media firm. Earnings (EPS) exceeded expectations in Q3-2023 although with Revenue slightly below expectations. Although a slowdown is still estimated for the last quarter of this year, the forecast for 2024 is rosy with an annual EPS of 5.02 (close to the pre-pamdemic level).
According with Morningstar Analyst: Parks and resorts segment will rebound strongly from the pandemic as families still view the parks as a prime vacation destination. Disney+ has a long runway for growth available in both the U.S. and internationally. The firm’s original series and the deep and constantly expanding library will drive the growth. Although making movies is a hit-or-miss business, Disney’s popular franchises and characters reduce this volatility over time. Additionally, the firm’s annual slate does not generally rely one big picture, reducing the downside from a flop. (Fair Value: 145.00 USD – Moat: Wide)
Last but not least, Disney is investing in artificial intelligence to further cut production costs.
TP @ 140 USD (55.56%)
SL @ 78 USD (-13.33%)
Technical Analysis
DIS stock has just bounced off an important 5-year support zone, confirming short-term EMA20 support on the daily. During today’s session there were good upside volumes that took prices above the EMA50. The threshold to be recovered is the EMA200 on the weekly (now at 91.65 USD), above which I expect a sudden rise towards 100/120 USD. First support in the 85 USD area, where there seems to be very good demand. After that, critical support is found in the 78 USD area (where I placed the SL for this position). This is a 2014 low!
Fundamental Analysis
Disney’s financial health is solid. The debt load has increased because of the Fox acquisition and pandemic-related cash flow challenges. The firm ended September 2022 with $48 billion in total debt outstanding, which equals 3.2 times adjusted fiscal 2022 EBITDA, an acceptable level for a media firm. Earnings (EPS) exceeded expectations in Q3-2023 although with Revenue slightly below expectations. Although a slowdown is still estimated for the last quarter of this year, the forecast for 2024 is rosy with an annual EPS of 5.02 (close to the pre-pamdemic level).
According with Morningstar Analyst: Parks and resorts segment will rebound strongly from the pandemic as families still view the parks as a prime vacation destination. Disney+ has a long runway for growth available in both the U.S. and internationally. The firm’s original series and the deep and constantly expanding library will drive the growth. Although making movies is a hit-or-miss business, Disney’s popular franchises and characters reduce this volatility over time. Additionally, the firm’s annual slate does not generally rely one big picture, reducing the downside from a flop. (Fair Value: 145.00 USD – Moat: Wide)
Last but not least, Disney is investing in artificial intelligence to further cut production costs.