It has not been a vintage year for Walt Disney (NYSE:DIS) movies. After the failures of Indiana Jones and the Dial of Destiny and the Haunted Mansion, the current quarter (FY1Q) has seen a continuation of the trend.
Both The Marvels and Wish have underperformed vs. expectations, with the latter amounting to another Thanksgiving disappointment, following Strange World’s flop in 2022.
The lackluster box office performance can be attributed in part to some downward revisions for the quarter, as noted by Bank of America analyst Jessica Reif Ehrlich.
“We modestly lower our fiscal 1Q consolidated revenue and operating income forecasts to reflect disappointing film performance and a less dramatic step up in DTC revenue from the price increases,” the analyst explained.
Accordingly, Ehrlich’s FY1Q EPS is forecast is lowered from the prior $0.95 to $0.92. That said, to reflect “modestly higher” Parks OI (operating income) compared to her prior outlook, the analyst’s FY24 EPS estimates remain the same.
Looking ahead to 2024, Ehrlich anticipates that several unresolved matters will significantly influence the company’s stock performance. These key drivers include: “1) a potential proxy fight with activist investors, 2) a final Hulu resolution with any change to the ultimate value, most of which was already paid from Disney to Comcast in December, 3) any update on potential strategic investors in ESPN, 4) reinvigorating the company’s film division, 5) NBA contract renewal and 6) succession planning/updates.”
Despite the lower expectations for F1Q, Ehrlich remains firmly in the DIS bull camp. “DIS has a collection of best-in-class premiere assets (in content/IP as well as Theme Parks),” she summed up. “Near term catalysts include: 1) additional updates on strategic priorities for DIS, 2) continued robust theme park demand.”
Accordingly, Ehrlich rates DIS shares a Buy, coupled with a price target of $110. This target implies the potential for a 21% return over the course of one year. (To watch Ehrlich’s track record, click here)
Most on the Street back Ehrlich’s thesis. The stock claims a Strong Buy consensus rating, based on 17 Buys vs. 5 Holds. At $109.67, the average target closely resembles Erlich’s objective. (See Disney 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.
