As a seasoned gamer with a keen eye for market trends and a deep affection for all things Disney, I must admit that the latest financial results from the Burbank-based studio conglomerate have left me rather ecstatic! With its stock soaring higher and analysts boosting their price targets, it seems that the magic of Disney is once again working its charm on Wall Street.
Disney’s shares surged in Thursday’s trading following the release of their latest quarterly earnings report, which showcased robust performance from their film unit. This success was fueled by hits such as Deadpool & Wolverine, along with Inside Out 2.
The streaming sector of this major player in entertainment announced that Disney+ has surpassed 120 million subscribers and significantly improved its profitability, earning an operating income of $321 million.
The share price climbed by 6.23% to $109.12 at market’s end, and several analysts hiked their projected stock prices for the Burbank studio conglomerate, offering investors a seldom glimpse into its three-year outlook.
Guggenheim Securities analyst Michael Morris has increased his projected price from $110 to $130. In a research report, he stated that the ESPN Flagship launch, growth in consolidated entertainment, expansion of profits in parks, and clarity regarding succession are key factors supporting the buy recommendation for the company up until 2025.
CFRA Research’s analyst, Kenneth Leon, maintained his “hold” position on Disney stocks, yet raised his projected price by $22 to $120. He emphasized that Disney’s daring move in offering three years of earnings guidance through fiscal year 2027 caught the equity market’s attention, leading to a rise in share price. In the latest results, there was a significant improvement in direct-to-consumer (DTC) profits, but this was partially offset by a decrease in linear networks.
At the same time, analyst Jessica Reif-Ehrlich from Bank of America kept her recommendation for Disney as “buy”, setting a price goal at $120. In a report titled “Modest Earnings Per Share beat; Fiscal Year 2025 Guidance Above Our Estimate,” she noted that while Disney’s revenue surpassed expectations, their operating income was slightly below hers for the fourth fiscal quarter.
According to the analyst, the earnings from Disney’s entertainment and experiences segment were generally on track. However, sports results fell slightly short of expectations. The analyst emphasized that Disney boasts top-tier premier assets. In summary, Reif-Ehrlich anticipates two key triggers in the near future: 1) a shift towards profitability in their Direct-to-Consumer (DTC) segment and 2) a revival in their parks business.
In the report titled “Strong Performance; Future Prospects Improving,” analyst John Hodulik from UBS maintained his recommendation to buy Disney and set a price target of $120. He commended Disney for delivering roughly on-target earnings for their fiscal fourth quarter and outlining a three-year forecast that surpasses expectations. Additionally, he highlighted the company’s projected growth in earnings per share for fiscal year 2025, with an increase expected to pick up pace in fiscal 2026.
The analyst pointed out that Disney was progressing towards enhanced streaming profitability. “The addition of core Disney+ subscribers amounted to 4.4 million (UBS had predicted 1.4 million; anticipation for moderate growth), with 1.2 million in the U.S. and Canada,” Hodulik explained. “For fiscal year 20F25, management projects double-digit segment operating income growth with a $875 million annual increase at DTC, which equates to approximately $1.02 billion compared to UBS’ projection of $1.07 billion.
The MoffettNathanson team, headed by Robert Fishman and Michael Nathanson, has given the company a “buy” rating, setting a share price target at $130. They expressed that this detailed outlook might mark a significant shift for Disney, which is welcomed not only by them but also by the financial community. However, it’s now up to everyone to assess how assured management is about these future projections. While Disney may be moving towards more specific guidance, the broader industry in which the company operates continues to be as volatile as ever.
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2024-11-15 00:54