Disney Earnings Preview: How Strong With the Force Is Disney+?

Walt Disney Co. (NYSE: DIS) is scheduled to release its most recent quarterly results after the markets close on Thursday. The Mouse House has been one of the companies most deeply affected by the pandemic, as most of its theme parks have shut down and few movie theaters remained open. However, Disney’s saving grace has been its streaming service, and this could be a big catalyst for the firm going forward.

For the fiscal first quarter, analysts are calling for a net loss of $0.41 per share on $15.93 billion in revenue. The same period of last year reportedly had $1.53 in earnings per share and revenue of $20.86 billion.

At Disney’s most recent investor day, management made it clear that Disney’s streaming services growth will crush competition from Netflix, Apple, Amazon and HBO Max. The forecast showed plans to reach 300 million to 350 million subscribers by its fiscal 2024.

It is hard to imagine any streaming service or services owned by one company could do so well as they claim. Netflix, considered the industry leader, has fewer than 200 million subscribers today. The Prime streaming service from Amazon may have that many. The total at Apple is in the tens of millions. HBO Max, an AT&T product, has a similar count.

The primary weapon for all the largest streaming services is the same: content. As part of the investor presentation, management said, “Disney+ alone is targeting to release more than 100 titles per year.”

Among Disney’s advantages is the inventory of wildly successful movies it already has. Some are among the top-grossing movies of all time. Disney owns the libraries of Disney, Pixar, Marvel, Star Wars and National Geographic.

A figure of up to 350 million subscribers shows how audacious Disney management has become. For the time being, they have the success to back it up.

Here’s what analysts were saying ahead of the report:

  • UBS has a Buy rating with a $200 price target.
  • Argus has a Buy rating with a $200 price target.
  • Moffett Nathanson raised its target to $180 from $160.
  • Citigroup has a Buy rating and a $205 target price.
  • JPMorgan has a Buy rating and a $210 price target.
  • Rosenblatt Securities rates it at Buy with a $210 price target.

Excluding Wednesday’s move, Walt Disney stock had outperformed the broad markets with a gain of about 32% in the past 52 weeks. Year to date, the share price was up only 4%.

Walt Disney stock traded at $188.19 on Wednesday, in a 52-week range of $79.07 to $190.70. The consensus price target is $188.70.

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