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HomeMarketDisney's Earnings Are Wednesday. What to Expect.

Disney’s Earnings Are Wednesday. What to Expect.

Disney is scheduled to report first-quarter earnings after the closing bell Wednesday.

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Dreamstime

When
Walt Disney
reports earnings Wednesday, investors will once again zoom in on the performance—and prospects—of the streaming service
Disney
+.

Disney (ticker: DIS) is scheduled to report results for the three months through December, the first quarter of its fiscal year, after the closing bell on Wednesday. Analysts surveyed by
FactSet
expect earnings of 78 cents a share from sales of $23.45 billion, compared with $1.06 a share on revenue of $21.82 billion last year.

Analysts expect direct-to-consumer revenue, which includes sales of Disney streaming services like Disney+ and Hulu, to be $5.44 billion, a jump from last year’s $4.69 billion.

Direct to consumer sales disappointed Wall Street last quarter. Although Disney+ added more customers than analysts expected, the average revenue per subscriber declined. Losses at the streaming losses business grew as management spent heavily on programming.

Morgan Stanley
analyst Benjamin Swinburne sees that investment as a positive for the company over the long term.

“Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead,” Swinburne wrote in a research note. He rates the stock as Overweight with a $115 price target.

Disney does anticipate eventual strong returns from its streaming platform. On its most recent call to discuss its earnings with investors, former Chief Executive Bob Chapek said, “assuming we do not see a meaningful shift in the economic climate, we still expect Disney+ to achieve profitability in fiscal 2024, as losses begin to shrink in the first quarter of fiscal 2023.”

This is what investors want to hear reiterated during earnings, with Bob Iger at the helm of the company, wrote
Citi
analyst Jason Bazinet. Iger, the CEO of Disney from 2005 to 2020, returned as chief last year.

“Many investors believe Mr. Iger may materially reset the company’s longer-term DTC [direct to consumer] sub targets,” Bazinet wrote. “While this is possible…, we believe investors will be more focused on any commentary regarding the timing of profitability of the DTC business,” Bazinet added. He rates the stock as a Buy with a $145 price target.

Most analysts that cover Disney are bullish on the stock. Of the 29 analysts surveyed by FactSet, 24 say the stock is a Buy, five say it is a Hold. Nobody rates it at Sell.

Shares of Disney were down 0.2% Tuesday to $109.63. The stock has surged 26% so far this year. UPDATE at CLOSE

Write to Angela Palumbo at angela.palumbo@dowjones.com

Credit: marketwatch.com

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