Shares of The Walt Disney Company gained 3.3% in Thursday’s extended market trading after the mass media and entertainment conglomerate reported better-than-expected 4Q results fueled by strong subscriber additions in its streaming services.
Disney’s (DIS) 4Q revenues of $14.71 billion declined 23% year-over-year but beat the Street consensus of $14.2 billion. On an adjusted basis, it incurred a loss of $0.20 per share in 4Q versus adjusted EPS of $1.07 in the year-ago period. Analysts had expected a loss of $0.71 per share.
Disney CEO Bob Chapek said, “The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year.” (See DIS stock analysis on TipRanks).
Ahead of the earnings release, Morgan Stanley analyst Benjamin Swinburne raised the stock’s price target to $160 (18.1% upside potential) and maintained a Buy rating. Swinburne was optimistic about Disney’s fiscal 2021 earnings citing the company’s “supersized global streaming push” and hopes for COVID-19 vaccine. The analyst expects Disney’s streaming subscribers to more than double to 230 million by fiscal 2025 from 110 million in fiscal 2020.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 10 Buys and 4 Holds. The average price target stands at $146.09, implying upside potential of about 7.8% to current levels. Shares have declined 6.3% year-to-date.