AI stocks have been in the limelight in 2025. With investors' focus on the technology sector, there are stocks trading at attractive valuations from relatively ignored industries or sectors.

The Walt Disney Company (DIS) from the movies and entertainment industry is one stock that deserves attention. Recently, Wells Fargo resumed coverage on Disney stock with an “Overweight” rating and a price target of $159. This implies an upside potential of 41% from current levels. 

Wells Fargo believes that premiumization efforts will benefit Disney's Parks growth, driven by Cruises. There is likely to be sustainable per capita spending growth at theme parks. Further, the stabilization at ESPN through digital expansion will support margin expansion and value creation. 

About Disney Stock

The Walt Disney Company is a juggernaut in the entertainment sector and has parks and resorts in the Americas, Europe, and the Asia Pacific. 

The company operates under three key business segments that include entertainment, sports, and experiences. For the first nine months of fiscal 2025, Walt Disney has reported revenue of $72 billion, which is higher by 5% on a year-on-year (YoY) basis. For the same period, the company’s operating income was $14 billion, which was higher by 18% on a YoY basis. 

From a stock price perspective, DIS stock has trended higher by 22% in the last six months. However, with a focus on delivering sustainable growth, a forward price-earnings (P/E) ratio of 17.3 does not suggest stretched valuations even after a strong rally.

Strong Q3 Earnings and a Positive Outlook

For Q3 2025, Disney delivered an earnings beat with the EPS increasing by 16% on a year-on-year (YoY) basis. From an operating income perspective, the Experiences segment was the key driver, contributing to 54% of the total operating income for the period. 

It’s also worth noting that Disney reported operating and free cash flow of $13.6 billion and $7.5 billion, respectively, for the first nine months of the year. 

With the company investing in park expansions, robust free cash flows will support the capex and provide cash flow upside visibility for the long term. The company plans to invest over $30 billion in its Florida and California theme parks to enhance offerings. Further, an agreement has been signed to create Disneyland Abu Dhabi through a partnership with the Miral Group. 

Among other positives, Disney+ and Hulu subscriptions increased by 2.6 million on a quarter-on-quarter (QoQ) basis to 183 million. The company expects a further increase in subscribers in Q4. At the same time, a steady increase in revenue per subscriber is likely to translate into growth and margin expansion. 

In terms of risks, global macroeconomic headwinds can impact growth. However, with expansionary monetary policies globally, it’s likely that GDP growth will accelerate in the coming quarters. 

What Analysts Say About DIS Stock

DIS stock commands a “Strong Buy” rating, with 20 analysts recommending a “Strong Buy” for the stock. Further, two analysts opine that the stock is a “Moderate Buy,” and six analysts have assigned a “Hold” rating. 

Overall, a mean price target of $136.4 implies an upside potential of 21.2% from current levels of $112.5. It’s also worth mentioning that the most bullish price target is $160, implying an upside potential of 42.2%. 

This bullish view is backed by the company’s growth estimates. For FY 2025, the company has increased its adjusted EPS guidance to $5.75. 

Further, the management has reaffirmed the guidance for double-digit earnings growth in fiscal years 2026 and 2027. This is likely considering the investment in theme parks, higher revenue from international markets, and the integration of streaming platforms.