Disney (DIS) investors are bound to be unhappy, as the stock has lost over a fifth of its market cap over the last five years. Despite CEO Bob Iger’s turnaround efforts, the stock has been out of favor with markets. Iger, who returned from retirement to lead Disney again in November 2022, led a variety of initiatives to revive the company. While these have shown some results, the stock has underperformed during his tenure.

At the same time, streaming rival Netflix (NFLX) – which I argued in a previous article deserves a place in “Magnificent 7” – has been hitting new highs. Netflix’s market cap is now over twice Disney’s, thanks to the divergent price actions of the two stocks.

But Wall Street analysts haven’t lost faith in Disney, despite its frustrating price action, and the stock is rated as a “Strong Buy” by analysts. In this article, we’ll examine whether Disney is worth your money or if should you give the stock a pass. Let’s begin by looking at Disney’s recent earnings.

Disney Lost Streaming Subscribers

Disney posted better-than-expected revenues and profits in the December quarter. However, the company lost streaming subscribers. Ironically, Netflix added almost 19 million subscribers, which was twice what the Street was expecting and a new record for the company. Netflix has taken several measures like a password-sharing crackdown, paid sharing, ad-supported tier, sports streaming, and better content slate which helped it add 41 million subscribers last year.

At the end of 2024, Netflix had over 300 million streaming subscribers and the company’s subscriber base has run well ahead of Disney’s. Notably, by mid-2022, Disney boasted of more streaming subscribers than Netflix after accounting for all its platforms like Hulu and ESPN.

However, while Netflix has been able to grow its subscriber base significantly despite fears of cancelations following the password-sharing crackdown, Disney’s subscriber growth has been disappointing. The company expects a “modest decline” in subscribers in the current quarter also.

Disney’s Streaming Business Has Turned Profitable

Meanwhile, Iger’s strategy of focusing on streaming profits versus subscriber growth has paid off and the business has turned profitable. Its direct-to-consumer (DTC) segment posted an operating profit of $293 million in its fiscal Q1 2025. The quarterly operating loss of Disney’s streaming business peaked at nearly $1.5 billion in fiscal Q4 2022 and the segment’s performance on the bottom line has improved significantly since then.

Here’s Why DIS Stock Looks Like a Buy for 2025

I find Disney a good stock to buy for the following reasons.

• Disney Is Creating “Magic” Again: Iger put creativity back at the center of Disney’s culture and the company started focusing on quality rather than quantity in its movie production business. The results are visible in its box office collections, and last year Disney became the first studio post-COVID-19 to generate annual box office collections of over $5 billion. Moreover, the top three movies at the global box office were from the company. The importance of Disney’s box office success cannot be understated and goes way beyond the box office contributions to its earnings. In-house, quality movies add to Disney’s streaming content and make the offering even more valuable for subscribers. These also increase Disney’s connection with its customer base, which eventually transforms to higher traffic at its theme parks, which are the company’s cash flow engine.
• Streaming Profitability: Disney’s streaming profits should continue to improve in the coming quarters. The company has forecast DTC operating income of $875 million for the current fiscal year. It expects its streaming business to eventually post double-digit margins like Netflix’s. While that target might seem a bit lofty given where things stand today, there is a lot of room for Disney to improve that segment’s margins, especially as it scales up ad sales on the ad-supported tier.
• Sports Streaming: Disney is set to launch a direct-to-consumer platform for ESPN in the early fall of 2025. Sports streaming could be among the key growth drivers for Disney going forward. The strategy worked wonders for Netflix in Q4 and was among the factors that helped it add a record number of subscribers in the quarter.
• Comfortable Valuations and Strong Earnings Outlook: Disney expects its earnings to grow in “high single digits” this fiscal year and is projecting double-digit earnings growth in the two subsequent fiscal years. The stock trades at just over 20x its expected earnings over the next 12 months and the valuations look quite comfortable given the expected earnings growth.

Disney Stock Forecast

Of the 29 analysts covering Disney, 20 have a “Strong Buy” rating while two analysts rate it as a “Moderate Buy.” The remaining seven analysts rate DIS as a “Hold.” Its mean target price of $129.16 is 18.5% higher than the Feb. 13 closing price while the Street-high target price of $137 is 34% higher.

Disney seems on the right track under Iger and the turnaround has been shaping up nicely, which is well reflected in the box office performance and streaming profits. Overall, while Disney faces some headwinds in its parks segment in the short to medium term and the linear TV business continues to face structural issues amid cord cutting, I find it an attractive value stock at these prices.