Disney: Increased Capital Investment in Theme Parks Builds on Key Competitive Advantages

Disney announced firm plans to invest over $60 billion in its theme parks, resorts, and cruise business over the next decade, roughly double the investment in the segment historically. Management had been hinting at increased capital spending since May by disclosing that the firm would spend $17 billion to expand the Orlando resort and add three new cruise ships during fiscal 2025 and 2026. As a result, we were already projecting elevated capital spending of $5.8 billion on average from fiscal 2024-2028 versus an average of $4.4 billion from fiscal 2018-2022. Given the longer timelines for these capital-intensive projects, we expect spending will skew toward the end of this period. We are maintaining our $145 fair value estimate.