4 Disney Analysts Dissect The Mouse's Earnings

Here’s what four analysts who cover Walt Disney Co DIS had to say about the company’s fourth-quarter earnings, slower growth for Disney+ and what’s ahead for the media giant.

The Disney Analysts: Morgan Stanley analyst Benjamin Swinburne has an Overweight rating and a $210 price target.

Bank of America analyst Jessica Reif Ehrlich has a Buy rating and lowers the price target from $223 to $191.

Rosenblatt Securities analyst Mark Zgutowicz has a Buy rating and a $220 price target.

Needham analyst Laura Martin has a Hold rating and no price target.

Q4 Earnings Takeaways: Disney’s fourth quarter results were disappointing to Bank of America's Reif Ehrlich who lowered the price target and earnings per share estimates going forward.

The analyst expects a rebound in the latter part of fiscal 2022 with pent-up demand for travel and an increase in direct-to-consumer content.

“However, shares could be in the penalty box near term given FY4Q results and 1HFY22 commentary,” Reif Ehrlich said.

Disney highlighted planned growth through the metaverse in the future, something not lost on Needham's Martin in the updated note for investors.

“We believe DIS’s asset mix of both digital (Metaverse) and physical assets (Omniverse) maximizes its economic value capture over time vs competitors in only one space,” Martin said.

The analyst stated these catalysts won’t begin until later in 2022, giving a continued Hold rating on shares.

Related Link: Walt Disney Company Q4 Highlights: 118.1M Disney+ Subs, Lower ARPU, Parks Resort Segment Up

Disney Plus: Morgan Stanley's Swinburne noted Disney said it will cost more than originally expected to grow its Disney+ streaming platform. The analyst thinks the company’s guidance for streaming is achievable.

“Disney is one of a shortlist of global streaming platforms that can achieve significant scale and profitability,” Swinburne said.

The analyst sees the company having to spend $10 billion annually on Disney+ content spending by 2024, similar to Netflix Inc NFLX.

An impressive slate of content for Disney+ and a $2 one-month subscription promotion are highlighted by Rosenblatt Securities' Zgutowicz in an updated note.

Highlights from Zguotowicz include the Disney+ November and December releases of “Hawkeye,” “The Beatles: Get Back,” “Shang Chi and Legend of the Ten Rings,” “Jungle Cruise,” The Book of Boba Fett” and “Spider Man: No Way Home.”

“We expect 148 million reported Disney+ subs in 1Q vs. 143 million consensus,” Zgutowicz said.

Martin notes that Disney+ had 43.7 million subscribers for Hotstar India, which was flat on a quarter-over-quarter basis. Disney reported average revenue per user of $4.12 for Disney+, which is $6.24 when Hotstar is excluded.

Disney added 44.1 million subscribers to Disney+ in fiscal 2021. Disney+ ended the quarter with 118 million subscribers and Disney had 179 million total direct-to-consumer subscribers at quarter end. The company is guiding for 230 million to 260 million total direct-to-consumer subs by 2024.

DIS Price Action: Walt Disney Company shares are down 6.42% to $163.08 on Thursday at publication.

Photo by Brian McGowan on Unsplash