Wall Street analysts maintain 'Strong Buy' on Disney despite market underperformance

The Walt Disney Company has significantly underperformed the broader market over the past 12 months, with shares declining 9.1% compared to a 21.5% surge in the S&P 500 Index. The divergence continued into 2026, where Disney stock fell nearly 8% while the benchmark index rose 12.6%. Despite this lag, sentiment has shifted following the release of fiscal third-quarter 2026 results on 5 August, which demonstrated operational resilience against macroeconomic headwinds.

Revenue for the quarter reached $25.2 billion, marking a 7% year-on-year increase from $23.7 billion. Adjusted earnings per share rose to $2.06, up from $1.61 in the previous year, surpassing Wall Street expectations. The positive data prompted a 3.7% rise in shares on 5 August, followed by a further 2.9% gain on 6 August. This performance adds to a solid earnings surprise history, with the company having surpassed consensus estimates in each of the last four quarters.

Among 32 analysts covering the stock, the consensus rating is a "Strong Buy." This sentiment is driven by 23 "Strong Buy" ratings, four "Moderate Buys," four "Holds," and one "Strong Sell." The configuration is slightly more bullish than one month ago, when there were 22 "Strong Buy" ratings. The mean price target stands at $128.87, implying a 23.1% upside from current levels, while the highest target on the street reaches $163, suggesting a potential 55.7% upside.

Argus Research recently reaffirmed its "Buy" rating on Disney and assigned a $134 price target following the stronger-than-expected fiscal third-quarter results. Looking ahead, analysts expect diluted earnings per share for the current fiscal year, which ends in September, to rise 16.5% to $6.91. The company, which holds a market capitalisation of $180.8 billion, continues to leverage its portfolio of intellectual property franchises including Marvel, Star Wars, and ESPN.

Investors had previously expressed concern regarding discretionary spending pressures on Disney's theme parks and experiences business due to persistent inflation and higher fuel prices. However, the recent earnings beat has helped alleviate some of these fears. The State Street Communication Services Select Sector SPDR ETF, which includes Disney, has risen 3.2% over the past year, outperforming the stock, although it declined 5.6% in 2026, still outpacing Disney's recent performance.