By Famed investor Jim Cramer has expressed interest in buying more shares of Walt Disney Co. if its stock price drops below the $90 mark.
Despite a challenging year for Disney investors since April, Cramer remains optimistic about the company’s future, citing potential rate cuts as a key factor that could boost consumer-facing businesses like Disney.
“I’m advocating for patience,” Cramer told members of his Investing Club on Thursday.
“While there’s no clear-cut solution right now, things are gradually improving.”
He projects a potential upside for Disney shares, expecting them to reach $130, which represents about a 35% increase from current levels.
Why is Jim Cramer bullish on Disney stock?
Cramer’s confidence in Disney primarily stems from its theme park segment, which has historically been a strong profit driver.
Although the parks in Florida and California experienced weakness in the last quarter, as consumers pulled back due to economic uncertainty, Cramer views this slowdown as temporary.
Hurricane Milton is also expected to impact the company’s experience division, but management anticipates flat attendance in the coming quarters.
Cramer encourages buying Disney stock during this period of weakness, believing that the theme parks will rebound and provide significant growth in the long run.
He’s particularly optimistic that Disney stock will rally if the company can outline a long-term growth strategy beyond movies and ESPN.
This advice comes shortly after Disneyland raised ticket prices by $7 to $12, signaling confidence in its future earnings potential.
Disney’s focus on experiences
Cramer urges Disney to focus on expanding its theme park offerings, now that the company’s streaming business has turned a quarterly profit.
A recovery in the experiences segment, he argues, would likely boost Disney’s stock price considerably.
Earlier this year, Disney announced plans to invest $60 billion in its experiences business over the next decade, reinforcing Cramer’s view that this sector will play a crucial role in the company’s growth.
Earnings and analyst expectations
Disney is set to report its quarterly earnings in mid-November, with analysts expecting earnings of $1.09 per share, up from 82 cents a year ago.
UBS analysts also share Cramer’s optimism, forecasting synergies from Hulu, the deconsolidation of its India assets, and cost efficiencies that could drive the stock back to $120 within the next year.
UBS predicts mid-single-digit growth in Disney’s per-share earnings for fiscal year 2025, adding further support to the bullish outlook.
Finally, Disney’s current dividend yield of 0.78% makes it an attractive option for investors looking to benefit from both growth potential and income.
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