Disney Stakes Its Media Empire: Key Performance Indicators Under the Spotlight
Wall Street Eyes Disney’s Dominance
The entertainment behemoth has taken the spotlight as it unveils its fiscal second-quarter earnings report on Tuesday. Investors are eagerly anticipating an update on Disney’s performance amidst a transformative digital landscape. Shares have surged 28% this year, creating a buzz of excitement.
Contenders and Challenges
Disney has navigated a turbulent path, facing off against activist investor Nelson Peltz and Trian Partners in a contentious proxy battle. Despite these challenges, analysts remain optimistic and project strong earnings per share of .10 and revenue of .11 billion.
Riding the Bull
“Disney’s F2Q is likely to mirror the momentum we witnessed in F1Q,” predicts Bank of America’s Jessica Reif Ehrlich. As Disney’s cost-cutting initiatives and innovative plans bear fruit, analysts are growing more bullish. JPMorgan’s David Karnovsky upgraded the stock to “overweight” and set an ambitious price target of 0, anticipating a potential 23% surge from last Friday’s close.
Wells Fargo’s Steven Cahall also raised his price target to 1, projecting a 24% upside. He believes that with the proxy battle behind them, management can focus on executing their strategy, including improving profit margins within the direct-to-consumer segment. “We expect Disney to regain its momentum, and downward earnings revisions are unlikely, while upward revisions are more probable,” states Deutsche Bank’s Bryan Kraft, who hiked his price target to 0.
Direct-to-Consumer Gamble
The industry has its gaze fixed upon Disney’s direct-to-consumer (DTC) operations, eager to know if profitability is within reach this year. This unit encompasses Disney+ and its streaming portfolio. StreetAccount estimates suggest 229.35 million subscribers across the unit, with Disney+ accounting for about 155 million.
“Disney’s business model is reminiscent of the early 2000s, when it commanded a premium in valuation due to its compelling content and streaming success,” remarks Evercore ISI’s Vijay Jayant. Bank of America’s Ehrlich echoes this view, predicting cost savings of over .5 billion and expressing confidence in DTC’s ability to attain profitability by the fourth quarter.
Data sourced from: cnbc.com
