Analysts believe this stock "offers an attractive valuation opportunity for investment."

Investing.com - Raymond James analyst Ric Prentiss on Wednesday raised Disney’s stock rating from “Market Perform” to “Outperform,” setting a target price of $115, saying the current macro backdrop and headwinds from international visitors represent an “opportunity to invest at an extremely attractive valuation.”

“We stress-tested the model—not only across the base case, but also across several bear-case scenarios with differing levels of severity—and we believe that even in some of the more challenging scenarios, the stock remains at historical lows,” Prentiss wrote.

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Disney trades at an estimated forward P/E of about 15x and a forward free cash flow multiple of 13x, a significant discount versus its 10-year median P/E of about 20x and its current P/E of about 23x.

Prentiss did not raise the rating all the way to “Strong Buy,” citing “very real headwinds and macro risks” facing the theme park business. He emphasized that this upgrade is also not a view on the results for the second fiscal quarter of March 2026, when adjusted EPS may be flat year over year or decline.

Instead, the analyst remains focused on the second half of fiscal 2026, when he expects multiple positive catalysts, including two cruise ships coming online, the competitive period with Universal’s Epic Universe entering a comparable phase, the opening of the Paris Disneyland “Frozen” expansion project, and more favorable timing for sports-rights cost.

The core pillar of the bull case is Disney’s direct-to-consumer streaming business. Raymond James expects that from fiscal 2025 through fiscal 2028, the entertainment SVOD business will generate $3 billion of incremental operating revenue. Prentiss noted that growth in the direct-to-consumer business is expected to be “far less sensitive to the macro environment” than the Experiences segment.

Regarding the theme parks business, he acknowledged that international visitor volumes—which typically account for a low-to-mid teens percentage of domestic visitors after the pandemic—have already been constrained, and said the lower international visitor levels appear to be reflected in the stock price.

Raymond James lowered its adjusted EPS forecasts for fiscal 2026, 2027, and 2028 to reflect a more cautious near-term outlook for the theme parks business.

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