eyeQ: this famous US stock is overvalued
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Here’s why this rally has gone too far.
29th May 2025 10:21
by Huw Roberts from eyeQ
“Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance.” eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Walt Disney
Macro Relevance: 71%
Model Value: $100.56
Fair Value Gap: +9.83% premium to model value
Data correct as at 29 May 2025. Please click glossary for explanation of terms. Long-term strategic model.
Moana 2 was a huge box office success, grossing over $1 billion at the box office worldwide last year. Now there are hopes that Lilo & Stitch will do the same again for Disney. The film was originally meant to be screened on their dedicated TV channel Disney+. That would have helped attract and retain subscribers to the channel but wouldn't have brought in hard sales dollars.
So, the firm has enjoyed a big financial boost and that optimism is reflected in the recent rally with the stock up around 36% from the early April lows.
eyeQ's model value for the stock price is also rising, but not to the same degree. That disparity leaves Disney nearly 10% rich to aggregate macro conditions, which is enough to trigger a bearish signal.
Of course, film production is only one part of the Disney empire and merchandise and theme parks are a key revenue generator too. Bottom-up analysis will help in that regard. But, from eyeQ's perspective, DIS is in a macro regime and a lot of good news is now in the price already. More active investors may want to consider top slicing some exposure.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
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