Disney shares experienced an upswing on Friday, continuing a trend of significant gains spurred by the company’s recent quarterly performance that surpassed Wall Street expectations, along with a positive long-term outlook.
The stock’s recent breakout from a pennant pattern last week reflects a surge in momentum following the release of these strong financial results. Investors are advised to keep an eye on critical price levels for Disney’s shares, especially around $123, $137, and $153, while also noting support at approximately $85.
Disney’s shares rose 6% the previous day and increased another 3% early Friday trading to about $112. This uptick contributes to a remarkable 21% growth in 2024, although it remains slightly below the S&P 500’s 25% rise during the same timeframe.
The company has announced plans for a $3 billion stock buyback over the next year, forecasting high single-digit adjusted earnings per share (EPS) growth for fiscal 2025 and double-digit growth for both fiscal 2026 and 2027. This optimism is bolstered by the strong performance of its streaming division, which reported a $321 million operating profit in the September quarter.
From a technical standpoint, the stock’s breakout was supported by higher-than-average trading volume, suggesting increased interest from institutional investors. The relative strength index (RSI) over 60 indicates positive price momentum, leaving room for further price increases.
Investors are advised to closely watch the $123 resistance level, which lies just above the important 200-day moving average. A close above this level could facilitate further gains towards $137, with potential that prices could eventually reach up to $153, which could attract selling pressure due to historical price action patterns.
On the downside, if there is a reversal, the $85 support level should be closely monitored as it aligns with significant past price points, including pandemic lows.
This positive outlook for Disney showcases resilience in the entertainment giant as it works to navigate challenges in its various business segments, particularly in streaming. The projected earnings growth and strategic repurchases signal confidence in the company’s long-term recovery and growth trajectory.
In summary, Disney’s strong financial performance, strategic buyback initiatives, and favorable technical indicators suggest a positive path forward, encouraging investors and reaffirming confidence in the company’s resilience in the dynamic entertainment industry.