Wells Fargo has resumed coverage of Walt Disney (NYSE:DIS) with an Overweight rating, pointing to maturation and growth across its assets that create more predictable earnings growth.
The firm’s investment thesis points to premiumization efforts benefiting Disney’s Parks, long-term growth driven by Cruises, and stabilization at ESPN through digital expansion. The analysis also highlights a growth algorithm for the Direct-to-Consumer segment centered on content, bundling, and average revenue per user that is expected to drive strong incremental margins.
It’s “an Experiences stock with a Media heart,” analyst Steven Cahall said of the firm’s focus. “We’re most bullish on Experiences: In FY27E, we think it’ll be 55% of [operating income] and the No. 1 source of upside for the medium term.”
He sees sustainable per-capita spending growth at theme parks. A “moderate” Disney vacation is estimated to cost about $150 per hour per person for a family of four (excluding flights), which compares favorably to a high-profile concert at $830 per hour or an NFL regular-season game at $220 per hour. Beyond the parks, the cruise line business is projected to be the “single largest driver of earnings growth for the next decade.”
As for ESPN: “We’ve been bullish on sports into streaming for ’25 as we think there are cord cutter/never sports fans,” Cahall wrote. “We’re not worried about linear cannibalization given relative ARPUs … While we’re modestly below guidance for FY26 OI growth due to WWE/UFC, we see ESPN as increasingly de-risked.”
One other detail in the bank’s report comes on CEO succession: Cahall expects some clarity on that issue “soon” so that 2026 is a transition year, “arguably the final critical item for long-term investors on the sidelines.” In keeping with their focus on the Parks, Cahall figures that unit’s chief, Josh D’Amaro, is the “front-runner and investor favorite” to become Disney’s next CEO.
Wells Fargo’s $159 price target implies 41% upside; Disney stock (NYSE:DIS) was up 0.4% late in Monday’s trading session.