Disney Stock Jumps After Upgrade. Why Parks and Cruises Can Drive It Higher.

Jefferies cited the improving outlook for Disney’s theme parks as one factor that can drive shares higher. (Arturo Holmes/Getty Images for Disney Dreamers Academy)

Walt Disney stock was rising in early trading Monday after receiving an upgrade from Jefferies, which is forecasting the entertainment company’s operating profit will rise by 10% next fiscal year after nearly a decade of sluggish growth.

Analyst Ed Alter raised his rating to Buy from Hold and hiked his price target to $144 from $100. The new target implies shares can climb about 17% from their level as of Friday’s close. The stock closed Friday at $122.34. It has risen nearly 10% this year. It climbed another 1.4% early Monday, likely powered higher by Jefferies’ upgrade. The benchmark S&P 500 was up 0.3%.

The House of Mouse has struggled to grow its operating income since 2016 due to headwinds including the decline of linear TV and losses for the company’s streaming division. “This dynamic is set to change,” Alter said in a research note published Monday.

Jefferies has turned more bullish on Disney’s Experiences division, which includes theme parks and cruise lines. The unit is well-positioned thanks to the looming launch of two more cruise ships, Alter said. He also expects Epic Universe, a theme park owned by NBCUniversal parent Comcast that opened last month, to soon “flip to an Orlando traffic tailwind”—reflecting the idea that Epic will draw even more holidaymakers to central Florida, where Disney’s flagship park is based.

Alter also is expecting profit margin for Disney’s direct-to-consumer streaming unit to climb to 13% by the end of the company‘s fiscal 2028, up from 0% now. He pointed to The Bear, Fantastic Four, Zootopia 2, and Avatar 3 as new releases that could also boost earnings.

Write to George Glover at george.glover@dowjones.com