By George Glover

There has been plenty of drama at Walt Disney over the past decade. Since January 2016, the House of Mouse has released four Star Wars films, built a streaming platform, and overseen the departure and dramatic comeback of CEO Bob Iger.

But it has hardly been a fairy tale for investors. Disney shares were trading at about $110 on Tuesday -- just 17% above where they were 10 years ago. Netflix and the S&P 500 are up 832% and 271%, respectively, over the same period.

Still, there's reason for hope. Barron's in December named the stock as a top pick for 2026, citing a cheap valuation for a company that controls elite entertainment assets and looks set for strong theme-park earnings growth.

There will also be a new CEO. Iger is set to step down at the end of 2026, with Disney expected to announce his successor within the next few weeks. Parks chief Josh D'Amaro and TV head Dana Walden are the leading candidates, The Wall Street Journal has reported. Disney didn't respond to a request for comment about its CEO succession plans.

Whoever gets the gig faces a huge task in turning around a lost decade for the shares. Barron's has drawn up a to-do list for Iger's replacement.

1) Accelerate Streaming Growth

This should be the new boss' priority. Investors "need renewed confidence that [streaming] revenue growth and profitability still have meaningful runway," MoffettNathanson analyst Robert Fishman writes in a research note. He rates the stock at Buy, with a $140 price target, implying upside of 27%.

Disney looks to be moving in the right direction. MoffettNathanson estimates that the operating margin for the streaming division will climb to 11% from 7% over the fiscal year ending in September.

Chief Financial Officer Hugh Johnston said on an earnings call in November that the company plans to reach the double-digit milestone by increasing revenue, not cutting costs. "We're certainly looking to gain margin in chunks, not in basis points, as we think beyond 2026 and into the future," he said.

The goal looks achievable if the 2026 content slate (more on that later) is a hit. Artificial intelligence should help, too: Disney struck a partnership with ChatGPT developer OpenAI in December, and that could pave the way to integrate the technology into Disney+ and drive up user engagement.

2) Deliver More Box-Office Hits

Disney has opted to sit on the sidelines while rivals Netflix and Paramount Skydance battle for Warner Bros. Discovery. That's a smart move, considering what Disney already has -- who needs Batman or Harry Potter when you have Spider-Man and Luke Skywalker?

The content slate for the next two years looks strong, headlined by new Toy Story, Star Wars, Avengers, Ice Age, and The Simpsons movies. The challenge for Iger's successor will be keeping the box-office momentum rolling.

Last year looks like a good start. Zootopia 2, Lilo & Stitch, and Avatar: Fire and Ash all grossed more than $1 billion. The new CEO needs to keep pumping out movies that hit the 10-figure mark, while recognizing that cinemagoers may have superhero fatigue -- Marvel's Thunderbolts*, Captain America, and The Fantastic Four all flopped at the box office in 2025.

Fishman says the long-term goal should be to build a streaming "flywheel" -- where every time Disney pumps out a hit film or TV series, it is able to attract more users, in turn producing more money for new content. The model has worked wonders for Netflix, which has grown its operating margin to 27%.

3) Kick ESPN Into Shape

Disney's most worrying asset over the past decade has been ESPN. The cable sports network has gone from major moneymaker to pain point, bleeding subscribers as the pivot to streaming has accelerated.

Disney can't turn back the tide, but there are ways to stop the rot. The company finally launched an ESPN streaming service in August, and the key question now is whether that can deliver enough profit to offset cable losses.

Disney is close to doing just that. Operating income for the sports segment climbed by $476 million last year, while profit for the linear networks division fell by $497 million. Iger said in November that the ESPN streaming launch had been "a real success," but investors will likely remain skeptical until February, when Disney will report earnings for its fiscal first quarter.

The big date on the horizon is February 2027, when ESPN is set to air the Super Bowl for the first time. Over the longer term, the new CEO has plenty of options -- including selling off or spinning out ESPN, emulating Comcast's move to jettison its cable assets.

4) Build on Parks Success

This one is simple. The experiences division, which includes theme parks and cruise lines, has become Disney's biggest earnings driver. It accounted for $10 billion of the company's $17.6 billion in operating income last year, and analysts expect that figure to grow another 22%, to $12.2 billion, by 2028.

Comcast's new Orlando park, Epic Universe, may have taken some foot traffic away from the House of Mouse, and some analysts worry about an economic downturn that could pinch thrill-seekers' wallets. The good news is that Disney has dipped into its pockets, pouring tens of billions of dollars into theme parks and cruise ships to make sure its attractions remain best in class.

"This is the most important business to drive value for the firm, and it's set up for durable growth," says Morningstar analyst Matt Dolgin, adding that the investment in experiences will drive "natural upside."

The last time Disney replaced Iger was a disaster. His successor as CEO, Bob Chapek, lasted just 21 months as CEO before being unceremoniously axed in November 2022 following a dismal earnings report.

But analysts think the House of Mouse is in a much better position this time around, with streaming turning a profit and parks looking strong. The CEO just "needs to execute on the foundation that is in place," says Dolgin.

Iger's looming departure may make investors nervous, but it needn't be a Chapek-style fiasco. If the new CEO gets the basics right, then Disney stock looks well positioned to rediscover its magic.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 28, 2026 01:00 ET (06:00 GMT)

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