As Disney Stock Continues to Underperform, Should You Buy DIS on the Dip or Stay Far, Far Away?

Core Viewpoint - Disney's stock has underperformed the market despite a recent turnaround in its streaming business, with a notable operating profit reported in the latest quarter [2][4]. Group 1: Stock Performance - Disney's stock is down just over 1% this year and has underperformed the market significantly [1] - The stock gained 23% in 2024, aligning with the S&P 500 Index, but has lagged behind the broader market in the previous three years [1] Group 2: Company Turnaround - Since Bob Iger returned as CEO in November 2022, Disney has initiated a transformation plan that has positively impacted its streaming business, which reported an operating profit of $346 million in the most recent quarter [2] - This is a significant improvement from an operating loss of nearly $1.5 billion in fiscal Q4 2022 under former CEO Bob Chapek [2] Group 3: Challenges Facing Disney - Disney is facing challenges such as low tourist arrivals in the U.S. due to immigration policies, which have deterred potential theme park visitors [4] - Concerns about a slowdown in consumer spending may affect traffic at Disney's theme parks [4] - The linear TV business continues to experience structural decline, adding to the company's challenges [4] Group 4: Analyst Sentiment - Sell-side analysts maintain a positive outlook on Disney, with a consensus rating of "Strong Buy" from 28 analysts [6] - The mean target price for Disney's stock is $136.38, representing an increase of over 22% from the closing price on October 15 [6] Group 5: Streaming Business Outlook - Disney's streaming business has become profitable, but margins remain low, with expectations to achieve double-digit margins similar to Netflix [7] - The company plans to increase prices for its streaming service effective October 21, which is expected to enhance profitability in that segment [7]