Disney (DIS): JPMorgan sees Disney entering FY27 with a stronger earnings cadence, resilient parks and streaming-led revenue growth.

Overview

JPMorgan previews Disney’s F4Q26 results and argues that FY27 should have a more favorable, first-half-weighted growth profile than the back-half-weighted setup that disappointed investors previously. Its constructive view rests on resilient Experiences earnings, Sports catalysts and streaming revenue growth, while recognizing that heavier streaming investment tempers Entertainment margin expansion.

Core views

JPMorgan forecasts FY26 adjusted EPS of $6.71 excluding the 53rd week, up 13.3% year on year versus Disney’s roughly 12% guidance. Including the extra week, it forecasts $6.93, up 17.0%, broadly aligned with the company’s approximately 16% guidance and Bloomberg consensus growth of 17.1%. The 53rd week is expected to add about four percentage points to adjusted-EPS growth and roughly $600 million of F4Q26 segment operating income. JPMorgan estimates F4Q operating income of $4.36 billion excluding the week and $4.96 billion including it, close to management’s $4.9 billion outlook. Entertainment, Sports and Experiences are estimated to receive $232 million, $185 million and $182 million, respectively, of extra-week operating-income contribution. For FY27, the firm estimates adjusted EPS of $7.48, up 11.4% from the ex-week FY26 base and modestly below Bloomberg consensus of $7.51. The report expects FY27 total segment operating income to rise 3.2% from the FY26 including-week base, but with a pronounced first-half skew: +12.3%, +7.3%, -5.3% and +0.6% in F1Q through F4Q27. Holiday-calendar shifts move New Year effects into F1Q27 and Easter into F2Q27, creating a tougher F3Q comparison. F1Q should also benefit from cruise capacity additions, although heavier NFL Network and college-football rights costs partly offset this. F2Q is expected to gain from a stronger theatrical comparison and incremental Super Bowl benefit. F3Q faces the Disney Wish dry-dock, a roughly $100 million tariff-refund comparison and the Easter timing effect, leading JPMorgan to project a 1.3% decline in Experiences operating income. F4Q growth will be held back by comparison with the prior year’s approximately $600 million extra-week operating income. The firm expects FY27 capex and buyback guidance of about $9 billion each and models cash content spending of about $26 billion, up from about $24 billion in FY26. For Experiences, JPMorgan forecasts F4Q26 operating income of $1.985 billion, up 5.7% year on year excluding the extra week, and FY26 operating income of $10.926 billion, up 9.3%, consistent with management’s high-single-digit framework. The model assumes 2% year-on-year domestic-parks attendance growth in F4Q, below the 3% reported in F3Q, even as near-term traffic indicators softened: Orlando and Tampa inbound passengers fell 5.7% year on year in July-August, WDW wait times were down 10.0% in July and 4% in August-September, and Placer.io traffic averaged up only 0.2% in July-August. JPMorgan nevertheless highlights management’s view that Disney’s business has been more resilient than market perceptions, helped in F3Q by domestic marketing and promotions that supported both attendance and per-capita spending. Global Guests growth accelerated to 4% in F3Q26 from about 1% in FY25 and 2% in F2Q26, driven by 3% domestic-attendance growth and double-digit growth in passenger-cruise days; international parks attendance was flat. The firm models another 4% Global Guests increase in F4Q, with cruises the principal volume driver. It sees limited FY27 traffic contribution from major new domestic attractions, with more meaningful benefit expected in FY28 and beyond as capacity projects are delivered. Sports is projected to rebound in F4Q26, with operating income of $1.30 billion, up 43% year on year, as prior-year UFC and Formula 1 rights costs roll off, programming costs ease and NFL Network contributes revenue. JPMorgan forecasts FY26 segment operating-income growth of 4.2%. For FY27, it raises Sports revenue to $19.46 billion, up 7.2% year on year excluding the extra week, and operating income to $3.15 billion, up 4.7%. The revision reflects ESPN direct-to-consumer price increases, higher Super Bowl advertising and NFL Network support. ESPN Unlimited increased to $31.99 monthly and $319.99 annually, while ESPN Select increased to $13.99 monthly and $139.99 annually. The report also points to strong live-sports advertising and management’s expectation that ESPN’s direct-to-consumer product remains on track. JPMorgan raises FY26 Entertainment operating income slightly to $5.187 billion, implying 11.0% growth, but lowers its FY27 Entertainment operating-income forecast to $5.47 billion from $5.65 billion. The change reflects management’s emphasis on growing operating-income dollars rather than maximizing margin percentage. JPMorgan raises FY27 SVOD revenue growth to 10.0% from 6.4%, led by Disney+ International, but cuts forecast SVOD operating income to $2.94 billion from $3.13 billion and lowers the margin to 12.2% from 13.4%. Greater international-programming and streaming-user-interface investment is expected to lift ex-week operating-expense growth to roughly 8%. Domestic Disney+ and Hulu price increases provide a FY27 pricing tailwind, while a greater emphasis on the ad-supported bundle is expected to slow ARPU growth but support lower churn, higher lifetime value and subscriber acquisition. Entertainment operating-income growth also faces an equity-income step-down after the A&E divestment. In theatrical, JPMorgan notes that Moana grossed $322 million, or about 1.3 times production budget, while The Dog Stars, Super Troopers 3 and Oasis: Don’t Look Back in Anger also underperformed and create impairment risk. Toy Story 5 generated $1.1 billion globally, with approximately $385 million falling in F4Q, and Avengers Endgame: Encore and Cars re-releases added approximately $90 million and $18 million in global gross, respectively, providing a high-margin offset. JPMorgan does not include a Spider-Man: Brand New Day contribution in its theatrical estimates because the Disney-Sony economics are unclear. JPMorgan considers Disney attractive at roughly 14x FY27 consensus EPS. Its $137 December 2027 target uses a DCF with an 8.8% WACC and 3.5% terminal growth rate. The DCF estimates 2027-30 discounted FCFF of $40.143 billion, a 2030 terminal value of $231.240 billion and a fair value of $137 per share.

Analysis framework

JPMorgan updates its Disney model segment by segment, separates the FY26 53rd-week effect from underlying growth, and compares its forecasts with company guidance, prior estimates and Bloomberg consensus. It evaluates parks using traffic, wait-time and booking indicators; models Sports through rights costs, pricing and advertising; assesses streaming through revenue, margin and investment assumptions; and values the shares with a discounted-cash-flow model.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  The report discounts projected unlevered free cash flow through 2030 using an 8.8% WACC and applies a 3.5% terminal growth rate to derive its $137 per-share fair value.

• Industry AnalysisVolume-price decomposition

  Volume and pricing analysis

  The report separates parks attendance, cruise volume, per-capita spending and streaming pricing effects to explain segment revenue and operating-income trends.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Disney (DIS)

  Primary covered company; JPMorgan expects a more favorable FY27 earnings profile supported by parks, Sports and streaming.

  Strengths

  Unique content, improving streaming financials, resilient parks operations, cruise capacity growth, and Sports pricing and advertising catalysts.

  Weaknesses

  Legacy linear-network pressures, softer near-term parks traffic indicators, and lower expected streaming-margin expansion.

  Comparison

  JPMorgan views Disney as its favorite in the media group and notes shares trade at roughly 14x FY27 consensus EPS.

  Risks

  Delayed DTC profitability, weaker macro-driven parks demand, faster linear-video subscriber losses, higher sports-rights costs and a volatile theatrical slate.

Key data

• FY26 adjusted EPS$6.93 including the 53rd weekUp 17.0% year on year; $6.71 excluding the extra week, up 13.3%.
• FY27 adjusted EPS$7.48Up 11.4% from the FY26 ex-53rd-week base.
• F4Q26 segment operating income$4.96 billion including the 53rd weekJPMorgan estimates $4.36 billion excluding the week; management outlook is $4.9 billion.
• FY26 Experiences operating income$10.926 billionUp 9.3% year on year; F4Q26 is estimated at $1.985 billion, up 5.7%.
• FY27 SVOD revenue growth10.0%Raised from 6.4%, while the SVOD operating-income-margin estimate falls to 12.2% from 13.4%.
• FY27 Sports revenue / operating income$19.46 billion / $3.15 billionUp 7.2% and 4.7% year on year, respectively, excluding the extra week.
• DCF assumptions8.8% WACC; 3.5% terminal growthSupports a $137 per-share December 2027 target and 30.3% implied upside.

Impact & implications

The report argues that a better quarterly cadence, continued Experiences resilience, Sports growth and streaming revenue expansion can improve sentiment toward Disney. It also stresses that the streaming growth opportunity requires greater investment, so stronger revenue need not translate into equally rapid margin expansion.

Risks

• Delayed profitability in Disney’s direct-to-consumer business.
• A weaker macro backdrop could slow theme-park demand.
• Linear-video subscriber declines could exceed expectations.
• Live-sports rights costs could increase more than expected.
• A volatile theatrical slate could weaken earnings and raise impairment risk.

What to watch

• Disney’s FY27 guidance for adjusted EPS, capex, buybacks and cash content spending.
• F4Q domestic parks attendance, Global Guests growth, cruise demand and per-capita spending.
• The pace of SVOD revenue growth, operating-expense investment and margin progression.
• ESPN direct-to-consumer pricing, Super Bowl advertising and sports-rights costs.
• The timing and earnings contribution of domestic park-capacity additions and the theatrical slate.