As the entertainment world waits for the Walt Disney Company’s first-quarter financial results, due on February 5, analysts and investors have plenty to consider regarding the company’s future. Goldman Sachs analyst Michael Ng remains optimistic, maintaining a Buy rating on Disney and nudging the price target up from $137 to $139. Ng emphasizes that sports, direct-to-consumer (DTC) services, and Disney’s renowned theme park experiences will be crucial areas for growth and challenges alike.
Disney is poised to show better-than-expected earnings per share for the fourth quarter, Ng points out, bolstered by strong performance across various business segments. While he projects the EBIT (Earnings Before Interest and Taxes) for Disney’s Experiences and Sports divisions to surpass initial forecasts, the Entertainment sector might not meet expectations. The box office successes of films like “Moana 2” and “Mufasa: The Lion King” could be key in driving content sales and licensing revenue upward.
Ng suggests Disney+ might experience flat growth in its core subscribers, a notable deviation from the consensus prediction of a 1 million subscriber reduction. This flat growth is attributed to temporary churn caused by recent price increases and the end of summer promotional deals. Despite this, Ng remains positive about future growth, estimating 6.5 million new Disney+ subscribers over 2025. Contributing factors include demand for theatrical titles and tightened measures on password sharing.
The forthcoming ESPN DTC service continues to draw curiosity, especially concerning its pricing and promotional strategies. Ng underscores the importance of this new service in shaping investor debates on the company’s DTC policies amid its ongoing collaborations, such as those with Hulu + Live TV and FuboTV.
Disney’s report follows Netflix’s announcement of a remarkable fourth-quarter performance, marked by its highest-ever net subscriber additions. This has raised the stakes for Disney as it attempts to compete in a fiercely contested streaming market. Ng indicates that the performance of Disney’s theme parks has been pivotal in improving investor sentiment, driven by recovery demand and promising growth forecasts.
Looking forward, Disney seems to hold immense potential as a high-quality earnings performer. Ng encourages investors not to overlook the company, given its relatively modest valuation relative to expected growth. Disney’s future results and announcements, particularly about the upcoming ESPN DTC launch, are likely to drive continued attention and analysis.
Investors are keenly observing Disney, especially as it navigates challenges across its various business fronts, solidifying its spot as a significant player in entertainment and streaming. With the company’s recent strong stock performance and strategic moves, Disney continues to attract interest and speculation.
You can read the original article here: https://www.benzinga.com/general/entertainment/25/01/43169631/disney-analyst-sees-flat-disney-growth-in-q1-after-netflixs-record-quarter-but-remains-bullish
