Disney (NYSE:DIS) Eyes Cost Savings

Entertainment giant Disney (NYSE:DIS) is planning to cut jobs as it targets cost-savings across the company. Bloomberg reported that Disney could eliminate thousands of jobs next week, including a reduction of 15% of its workforce in the entertainment division. 

The report highlighted that the job cuts would impact employees in the theme parks, TV, film, and corporate segments across every region. 

During the Q1 conference call, Disney said it is targeting $5.5 billion in cost savings across the company. The company expects these savings to come from reductions in SG&A and other operating expenses. Disney added that to achieve cost savings, it will cut 7,000 jobs. Moreover, it expects to generate $3 billion in cost savings from the content side of the business over the next few years. 

Disney also reorganized its business into three core divisions: Disney Parks, Experiences and Products, Disney Entertainment, and ESPN. Through the reorganization, the company aims to streamline its operations and drive efficiency. 

Thanks to its cost-cutting initiatives and strong balance sheet, Disney could declare a modest dividend by the end of 2023. Further, the move will help Disney return to earnings growth, which will support its stock price, noted Deutsche Bank analyst Bryan Kraft. 

Yesterday, Kraft raised Disney’s price target to $135 from $130 and reiterated his Buy rating. The analyst added that Disney could deliver positive earnings growth in Q3 on the back of its cost reduction initiatives, which could lead to the re-rating of its shares.

What is the Prediction for Disney Stock?

Including Kraft, 18 analysts recommend a Buy on Disney shares. Meanwhile, Disney stock has three Hold recommendations. Overall, it has a Strong Buy consensus rating on TipRanks. 

Further, analysts’ average price target of $129.17 implies 27.98% upside potential from current levels. 

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