The Walt Disney Company (NYSE:DIS) will be unveiling its Q2 FY 2025 earnings report today, and the market is eager to see what the entertainment giant has in store.
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The company performed well last quarter, surpassing both top- and bottom-line expectations with ease. Indeed, its Q1 FY 2025 revenues of $24.69 billion easily beat expectations by a cool $143.28 million, while its EPS of $1.76 exceeded projections by a whopping $0.33.
However, the darkening macroeconomic environment is sparking concerns surrounding discretionary spending, and Disney’s share price is down some ~17% year-to-date.
For the recently ended quarter, analysts are expecting a slight sequential decrease with revenues of $23.13 billion and an EPS of $1.21. Beyond the recent performance, investors will be keenly interested to better understand how Disney is planning on tackling the difficult conditions throughout the economy.
Heading into the earnings call, investor Luca Socci sees reasons aplenty for both hope and concern.
“I am positioning myself in the debate between two sides that either see DIS stock as a growth opportunity or a trap,” explains the 5-star investor.
For those bulls, Socci highlights Disney’s ownership of unique IP, including Marvel, Pixar, and Star Wars. The investor also points out that Disney+ streaming service is now profitable, and could receive a boost from plans to offer its flagship sports channel – ESPN – via the Disney+ platform.
On the other hand, Socci notes that there is a big risk that Disney’s experience segment – which is the company’s most profitable business – is becoming unaffordable for many. In addition, the company is beset by concerns that Netflix has emerged as the clear winner in the battle for streaming supremacy.
“At the same time, Netflix topped 300 million global subscribers and seems to be literally leaving Disney behind,” adds Socci.
To sum it all up, the investor is not ready to commit one way or another – and will be sitting on the sidelines for now.
“I am inclined to think that the stock may see further multiple compression if the company doesn’t convince investors about its ability to resume EPS growth and increase its profits,” concludes Socci, who rates DIS a Hold. (To watch Socci’s track record, click here)
Wall Street, however, is much more inclined to embrace a more bullish DIS story. With 12 Buy ratings, DIS boasts a Strong Buy consensus rating. Its 12-month average price target of $124.08 would yield gains close to 35% in the year ahead. (See DIS stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.