Source: PaxForex Premium Analytics Portal, Fundamental Insight
As seasons change, so do losing streaks. After closing lower for five consecutive months, Walt Disney's stock is showing signs of recovery in September, with a week still remaining.
It's not just the stock price that's taking a positive turn. Disney is fundamentally making strides in the right direction, although there's still a lot of heavy lifting ahead. Many of the bullish strategies it's implementing will take years, not months, to fully unfold. Still, there are a few key developments Disney investors can look forward to this fall.
- Box Office Hits are Returning
Disney has long been a leader in blockbuster films, and after a brief lull, it appears to be back in the game. The company hasn’t had a domestic box office champion since Avengers: Endgame in 2019. Although Avatar: The Way of Water topped global charts in 2022, Top Gun: Maverick took the domestic crown.
Disney looks ready to reclaim the title in 2024. The year's top two grossing films so far, Inside Out 2 and Deadpool & Wolverine, both belong to Disney, and more potential hits are lined up. This fall, Moana 2 will arrive just in time for the Thanksgiving box office surge, followed by Mufasa: The Lion King to close out the season.
After a few high-profile misses last year, Disney’s recent summer successes have restored confidence among shareholders. The upcoming releases should deliver another round of blockbuster wins.
- Disney+ is Turning Profitable
Disney+ was a major catalyst when it launched five years ago, pushing the stock to its all-time high in 2021. However, concerns about the streaming service’s profitability have since weighed heavily on shares.
When Bob Iger returned as CEO two years ago, one of his main goals was to bring Disney's streaming business into profitability by the end of fiscal 2024, which is now just a week away.
At the time, this goal seemed overly optimistic, as the company’s streaming division was posting substantial losses. Yet Disney has already achieved operating profitability in streaming earlier this year, and the outlook is looking brighter. With a price hike set for mid-October across its premium streaming services, the company is positioned for stronger results in its fiscal fourth-quarter earnings, which will be released in early November.
- Struggling Segments Could Bounce Back
Disney's fortunes are shifting, but its theme parks and media networks have recently faced challenges. After years of success, the theme parks have seen a slowdown, and Disney’s media networks are dealing with the impacts of cord-cutting and a sluggish advertising market.
While Disney's domestic theme parks may not recover overnight, the company made headlines this summer with plans for large-scale expansions at its gated attractions, set to roll out over the next several years.
On the media front, the advertising slowdown could see some relief this season, thanks to upcoming political campaigns and ballot initiatives that are expected to increase ad spend leading up to the November elections.
The sentiment surrounding Disney stock is turning more positive, and investors have the chance to buy in at a favorable price. Trading at just 18 times forward earnings, Disney is near its lowest valuation since the pandemic began. As the entertainment giant continues to make the right moves, this could be the start of a more sustained upward trend for the House of Mouse.
As long as the price is above 89.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 92.67
- Take Profit 1: 95.00
- Take Profit 2: 98.00
Alternative scenario:
If the level of 89.00 is broken-down , follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 98.00
- Take Profit 1: 87.00
- Take Profit 2: 85.00
