New Disney Price Target After Morgan Stanley Update
The entertainment giant has a clear path to a share price increase, according to Morgan Stanley.
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Funny story:
About a week ago, I was trying to teach my “significant other” some rudimentary technical analysis. I showed her a chart of Disney (DIS). She named the stock. I was not looking to get long Disney, but I did that day. Thank goodness.
When trying to spread the good word of financial survival to folks who really had not been very exposed to living life in the markets prior, I always start with technical analysis. Mastering TA is not easy. That said, learning the basics of TA is far easier than putting in the hours required to pick up what one needs to know to make intelligent judgments concerning the ins and outs of fundamental analysis and nuance required to interpret macroeconomic/political analysis.
Additionally, our marketplace has evolved (devolved?) over the years from one where humans controlled the process of price discovery to one where algorithms were in charge. With the removal of humans from the process, trading and investment has become much more robotic and much less thoughtful.
The pursuit of price overshoot has replaced balanced trade as a core characteristic of modern markets, thus making technical analysis more important on an intraday or even day-to-day basis than it had ever been years ago. Algorithmic trading has resulted in a version of technical analysis that is far more accurate than it had ever been back when humans actually tried to fulfill their fiduciary responsibilities to their clients. Algorithms do not care if investors get the “fairest” price. They chase momentum. Anyway, I picked some Disney, thanks to my gal. Check it out.
News…
Last Thursday, Morgan Stanley released a research note stating that three factors could drive a Disney multiple re-rating over the next six to 12 months with a path towards a share price of $125. One: Sustained strength in Parks & Experiences. Two: Faster monetization of the content flywheel. Three: Durable double-digit Disney+ revenue growth coupled with expanding margins. Disney has already guided to high single-digit (in percentage terms) Experiences operating-income growth and a 10% FY26 SVOD margin.
Morgan Stanley has an Overweight rating and $125 price target on the shares. Sounds good, right? Remember, I bought these shares based on technical analysis, not fundamental analysis. Morgan Stanley’s Sean Diffley is rated at 2.5 stars out of five by TipRanks, but he’s better than that. Over the past two years, Diffley has compiled a success rate of 67%, but has generated an average return of just 2.7%. Hence the low rating.
The Chart
Readers will see an inverse head-and-shoulders pattern of bullish reversal with a $105 upside pivot. The stock took back its 200-day SMA last week which forced increased participation by professional managers. The stock is also likely to, in short order, experience a crossover of that same 200-day SMA by the 21-day EMA. That could result in an algorithmic boost for the shares and should get the swing crowd excited.
Above the chart, relative strength is about as robust as it can get without entering into a technically overbought state. Below the chart, the daily MACD is running with the bulls as all three components have been sending bullish signals since very late July.
Disney (DIS)
Target Price: $131
Pivot: $105
Add: Down to 200-day SMA (currently $104)
Panic: Loss of 50-day SMA (currently $100)
At the time of publication, Guilfoyle was long DIS equity.
