Man, people love Disney (DIS)… I mean, they really love the stock, and that was a problem for them six months ago.
I did a quick YouTube video on my outlook for Disney ahead of their earnings report in August. If you missed it you can take a quick look here… It’s a great example of an effective approach in making great earnings calls.
Unfortunately, the feedback following that specific video was less than pleasant. Unnumbered emails sent directly to me about how I was wrong on Disney. Comments in the YouTube channel. I even got a call from an old friend in the business telling me I was wrong.
Long story short, Disney stock dropped another 15% after that earnings report before bottoming in October.
My outlook for Disney was bearish then, things have changed now. Here’s why.
For months, the buzz around Disney shares has died. We’re not seeing investors, analysts, or the media – make sure you check that video out to see how Barron’s sealed the bearish deal for Disney ahead of earnings – look for Disney to make any big moves.
That’s a good thing because it means that expectations are muted.
Investor’s expectations are the largest driving force in the market, not earnings themselves.
Over the last six months, we’ve seen Wall Street and Main Street’s tone change. Disney was dropped from everyone’s bullish playlist after disappointing them in August. We’ve heard that the consumer is spending less on trips to resorts like Disney, but this is also their slow season.
I love these situations because it tells me that the expectations have dropped, which means its easier for Disney to impress with their earnings report this Wednesday.
Now, along with the lower expectations, Disney’s price chart is now in a bullish pattern. It was bearish in August.
The stock’s 50-day moving average is trending higher, shares are above their 200-day and just had a nice test of that critical trendline, AND Disney stock just broke into a new long-term bullish pattern last month.
There is one trigger price that is just above the stock that has the potential to drive the price to $115 over the next month or so. I’ll discuss that in a new video on the YouTube channel today or tomorrow.
I can’t believe I’m saying this, but I like the stock!
We’re seeing some changes in the fundamental picture as Disney moves to embrace the sports betting business along with ESPN and a true soft-landing situation in the economy will have the parks busy as consumers start to loosen-up their travel budgets again.
I like the stock for a nice 20-25% run through 2024.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.