Disney reports earnings Tuesday. Here’s what Wall Street is watching
Walt Disney puts its top-tier media dominance to the test when it reports results before the bell Tuesday. Shares have jumped 28% this year and 4% in May. But it hasn’t been an easy road for the entertainment giant as it grappled with activist investor Nelson Peltz and Trian Partners in a heated proxy battle . Analysts polled by LSEG expect the theme park operator to post earnings of $1.10 per share and revenues totaling roughly $22.11 billion for its fiscal second quarter. DIS YTD mountain Walt Disney shares this year “We anticipate DIS’ F2Q to reflect a continuation of the strong underlying momentum reported in F1Q,” wrote Bank of America analyst Jessica Reif Ehrlich in an April note. Some Wall Street firms have turned more bullish on the company heading into the print. Last month, JPMorgan analyst David Karnovsky moved to an overweight rating on the stock and upped his price target to $140 — or about 23% upside from Friday’s close — as recent cost-cutting plans and initiatives begin paying off. “While we are cautious on the media landscape due to PayTV sub losses and advertising headwinds, Disney is our favorite in the group due to the company’s unique content, improving streaming financials, and parks operation which provides an avenue to attractively deploy capital,” he wrote. Wells Fargo’s Steven Cahall upped his price target to $141 a share, suggesting upside of 24%. He views the end of Disney’s proxy fight as an opportunity for management to refocus on execution, including margins within its direct-to-consumer business. “Importantly, we think that the company has regained its stride and the risk of negative earnings revisions for the remainder of the year is relatively low, with positive revisions having a higher probability,” wrote Deutsche Bank’s Bryan Kraft as he hiked his price target to $130 a share, implying shares could rise another 14%. All eyes on direct-to-consumer The company’s DTC business, and whether it can reach profitability or break even at some point this year, remains top of mind for Wall Street this reporting season. The business unit includes Disney+ and its streaming portfolio. StreetAccount estimates call for 229.35 million subscribers across the business unit and nearly 155 million Disney+ subscribers. Last quarter, the company lost 1.3 million subscribers due to price increases. At its last earnings call in February, Disney said it expects between 5.5 million to 6 million added subscribers in the second quarter. Cahall anticipates upside to core net additions in the 2025 and 2026 fiscal years as the company cracks down on password sharing like peer Netflix . He forecasts an additional 4 million subscribers each year. “We believe the market is returning to the 2005-2015 valuation paradigm for Disney where the company deserves to trade at a modest premium to the market given that terminal value concerns have dissipated with the creation of a credible streaming business and EPS is again becoming more relevant as DTC approaches breakeven,” wrote Evercore ISI analyst Vijay Jayant in a note last month. Bank of America’s Ehrlich echoed similar sentiment, saying in an April note that Disney looks poised to top $7.5 billion in cost savings. The firm remains confident that the DTC business can attain profitability by the fourth quarter, prompting the analyst to hike her price target to $145 — or nearly 28% upside from Friday — and retain a buy rating.
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