Citi Research has issued a new report on Walt Disney Company (DIS.US), assigning the stock a "Buy" rating with a price target of $145. As of the close on January 6, 2026, Disney's stock price was $114.57, implying a projected 27% upside potential. Coupled with an expected dividend yield of 0.9%, the total anticipated return reaches 28%. Disney currently boasts a market capitalization of $203.648 billion, underscoring its solid position within the entertainment industry.
Regarding its entertainment business, Disney recently completed the acquisition of Fubo, a transaction that officially concluded on October 29, 2025. Citi estimates that approximately 50% of the earnings benefits from this acquisition will materialize in the first quarter of fiscal year 2026. However, due to revenue comparisons from several films and an increased number of general entertainment movie releases, Disney's Content Sales & Licensing (CSL&O) segment is expected to face approximately $400 million in year-over-year EBIT pressure during Q1 FY2026. Specifically, revenues from "Avatar" and "Zootopia 2" will be compared against those from "Moana 2" and "Mufasa: The Lion King." Furthermore, the economics of "Avatar" are atypical due to terms inherited from the acquisition of 21st Century Fox. Additionally, the release of a large volume of non-franchise films is diluting the profit per title.
In the sports segment, Disney's management is optimistic that the ESPN Unlimited product will not trigger incremental "cord-cutting" (users canceling traditional pay-TV services). They believe sports fans prefer to access all sports content within a single linear package rather than through multiple direct-to-consumer (DTC) apps. Consequently, Disney will continue collaborating with pay-TV providers to offer streamlined, sports-focused television packages. Although articles have mentioned that ESPN Unlimited and ESPN Select collectively have around 3 million subscribers, Disney management has not commented on this figure.
For the Parks and Experiences business, Disney's domestic parks are expected to benefit in Q1 FY2026 from two days of closures in the prior-year period caused by a hurricane. Nonetheless, a decline in international visitors and competition from Epic Universe will present challenges. For the cruise line business, despite new ship launches, overall fleet occupancy remains at a healthy level above 90%. Disney plans a continuous rollout of new ships through 2031 to expand its cruise fleet, although near-term margins will be impacted by the costs associated with these new vessel introductions.
In other business developments, Disney terminated its gaming partnership with Penn Entertainment (PENN.US) and established a new collaboration with DraftKings (DKNG.US). The new agreement is based on a fixed-fee payment model and does not include an equity component. Furthermore, Disney has made a strategic investment in OpenAI, following a framework similar to its partnership with Epic Games, aiming to invest in areas with significant consumer engagement growth while maintaining control over how its intellectual property is utilized.
On the risk front, Citi highlights potential downside risks to its price target and estimates. These include a faster-than-expected decline in pay-TV subscribers, macroeconomic challenges pressuring Disney's entertainment and sports advertising revenue, or underperformance of the company's upcoming film slate. Overall, Citi maintains an optimistic outlook for Disney's future, believing that its robust performance across entertainment, sports, and theme parks, combined with proactive expansion into new business areas, will deliver substantial returns for investors. However, investors should also closely monitor potential risks to make informed investment decisions.