Walt Disney’s (NYSE:DIS) chief financial officer Christine McCarthy announced that she is stepping down from her position and will continue to serve as a strategic advisor to the company through June 2024. While the company cited a family medical leave of absence as the reason for McCarthy’s departure, a Wall Street Journal report mentioned that the CFO had some disagreements with Disney’s CEO Robert Iger and other top executives over strategy.
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McCarthy has served in the CFO role since 2015. Her exit ends a 23 years tenure with the company and came as a surprise for some company executives. Disney’s finance chief for Disney Parks, Experiences and Products, Kevin Lansberry, will serve as the interim CFO effective July 1. McCarthy will assist in onboarding a long-term successor for the company. Post the announcement, DIS shares slipped 0.6% in Friday’s pre-market trading. Year-to-date, the stock has gained 4.5%.
Confrontation with Top Management
In discordance with Disney’s CEO, McCarthy reportedly had a different opinion about the company’s strategy, including the amount spent on content and the recent restructuring of business units. She believed that the Disney Entertainment unit should be further consolidated in order to see better profit margins. This put McCarthy in a difficult situation with the unit’s leadership.
Disney Undergoing Major Changes
The CFO’s departure comes as the entertainment company is undergoing a major restructuring in CEO Bob Iger’s second tenure. This is the second C-suite change in the past 12 months when Iger was re-elected to the CEO post in November after initially leaving the role in 2020. He will stay in the position through December 2024 and is also on the lookout for his successor.
In the past few months, Disney has trimmed its workforce by 7,000 jobs, targeting $5.5 billion in cost cuts as indicated in a recent earnings call. It also will incur a $1.5 billion impairment charge in its ongoing fiscal third quarter, related to the removal of content from streaming services Disney+ and Hulu.
Is Disney Stock a Buy or a Hold?
Of the 13 top Wall Street Analysts covering the stock, 11 have assigned a Buy rating, while two rate it a Hold. Overall, Disney scores a Strong Buy consensus rating. The average price target stands at $121.38, implying 30.6% upside potential.
In early June, Morgan Stanley analyst Benjamin Swinburne reaffirmed his Buy rating on the stock but lowered the price target from $120 to $110, implying an 18.4% upside potential. While the analyst notes that the company’s primary earnings driver, its Parks unit, continues to perform, its Media revenues are seen coming in lower, thereby driving the price target down.
Also, Truist analyst Matthew Thornton lowered his price target to $105 from $121 after considering the accelerated depreciation of the to-be-shut Star Wars hotel in the second half of FY23.
