Morgan Stanley Identifies Walt Disney as a Top Investment

Morgan Stanley has designated the Walt Disney Company (NYSE:DIS) as its prime investment choice, anticipating that the theme parks and cruise businesses will drive growth in the upcoming years through significant investments and improved profit margins.

The brokerage highlighted that Disney's experiences segment, which encompasses theme parks and cruises, is strategically positioned to achieve operating income growth of 6-8% for fiscal 2025, with expectations for high single-digit growth in fiscal 2026.

> “We believe achieving this guidance is not fully priced into current DIS shares as Disney's scaled investments at its Experiences segment offer durability in the growth outlook that warrants a healthy multiple to the broader market,” an analyst commented.

Morgan Stanley noted that expansion plans, such as increasing cruise capacity and developing underutilized theme park land, are projected to generate high returns.

Despite existing risks, the firm expressed confidence in Disney's accelerated growth in U.S. parks, even with the upcoming opening of Universal’s Epic Universe theme park in May 2025. The anticipated launch of new cruise ships in 2025 and early 2026 is expected to further enhance performance.

The brokerage concluded that cost pressures should decrease as Disney manages previous wage increases and possibly encounters lower startup expenses for its cruise operations, aiding in margin improvement.