Disney: Streaming Scale and Parks Leverage Drive Buy Rating

We initiate DIS with a Strong Buy rating and $193 PT. The Walt Disney Company is a global

entertainment conglomerate, including landmark studios, world-class theme parks, and a rapidly scaling streaming portfolio. We believe the most compelling aspect of DIS today is the contrast between a market distracted by the wounds of years past (legacy media drag, streaming losses) and a company quietly executing what is arguably the most aggressive EPS recovery in its history. With headlines fixated on subscriber churn or linear softness, underlying growth drivers are inflecting; mgmt's confidence in >$1B DTC op income in FY25 now clearly in-source (Hulu-ESPN bundling drove 25M incremental net adds, well above consensus). Pks continues to print top decile ROIC & mid SD bookings growth helping to support achievable consensus-like 100bps margin expansion, and sports- driven ad revs (+20% in latest qtr) combine with an accelerating buyback engine (forecast $2B in FY26) to lift our FY26E $6.65 EPS above street ($6.32), and drive our target multiple of 29x, vs historical average 30x and a media peer set that remains at +60x P/E. Yes, the path to DTC profitability will not be without bumps, and mgmt is the proverbial tightrope walker exposed to the scrutiny that attends any high-wire act; but 2 consecutive qtrs of 20% EPS beat give sufficient credence. With streaming scale as profit arrives, capital returns accelerating, and valuation at a significant discount to long-term averages, risk/reward looks compelling to us for investors looking