‘Hold Your Horses,’ Says Top Analyst About Disney Stock
Stock Analysis & Ideas

‘Hold Your Horses,’ Says Top Analyst About Disney Stock

While most of the big hitters have already released their latest earnings reports, not all have done so yet. Once the market action comes to a stop on Wednesday (November 8), Walt Disney (NYSE:DIS) will report its fiscal fourth quarter of 2023 results.

The readout comes at a time of change for the entertainment giant. For the first time following restructuring efforts, entertainment and sports will be reported separately as the company has split the Disney Media and Entertainment Distribution (DMED) business into two separate segments. The three main reporting segments will now be Entertainment, Sports, and Experiences.

The company’s non-sports Linear Networks, Disney+, and Hulu (DTC), along with Content Sales/Licensing (the studios’ businesses), now fall under the Entertainment banner. The Sports segment includes ESPN, ESPN+, and Star Sports.

With the new structure to consider ahead of the print, Doug Creutz, a 5-star analyst at TD Cowen, who ranks in the top 4% of the Street’s stock experts, has revised his model for Disney. His FY23 revenue forecast is lowered slightly from $89.1 billion to $89 billion (amounting to a year-over-year uptick of 6%), while adj. operating income is roughly unchanged at $12.6 billion (+4% y/y). At the bottom line, adj. EPS is nudged a touch higher from $3.56 to $3.57 (+1% y/y).

But there’s another important change taking place at the House of Mouse. On Monday, the company announced that Hugh Johnston, who for 13 years served as the CFO of Pepsi, has come on board as Disney’s new CFO and Sr. EVP.

According to Creutz, this is the first time since 1995 that Disney has brought in an outsider for a key executive role. “Bringing in Johnston represents a pretty significant change from decades of practice,” the 5-star analyst goes on to say. “Obviously, Disney is at a critical juncture right now, facing significant uncertainty about the future of its entertainment businesses. A fresh perspective may do the company some good. The Disney culture is extremely strong, however, and Johnston likely has a fair amount of work ahead of him to integrate successfully.”

All told, for now Creutz’s rating stays a Market Perform (i.e., Neutral), while his $94 price target suggests shares will surge 11% over the coming months. (To watch Creutz’s track record, click here)

Overall, 4 other analysts join Creutz on the sidelines and with the addition of 18 Buys and 1 Sell, the stock claims a Moderate Buy consensus rating. The average target stands at $105.62, implying shares will gain ~25% over the one-year timeframe. (See DIS stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.


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