'Disney The Only Asset We Want to Own in Media,' Analyst Says Following Q2 Results

Walt Disney Company DIS stock pulled back late Wednesday following the release of its quarterly results. An analyst at KeyBanc Capital Markets, however, is optimistic about the media and entertainment conglomerate.

The Disney Analyst: Brandon Nispel maintained an Overweight rating on Disney stock but lowered the price target from $216 to $151.

The Disney Thesis: Disney's fiscal-year 2022 second-quarter results were fairly strong, relative to consensus, Nispel said in a note. While the results of Linear Networks and Theme Parks exceeded expectations, operating income in Direct-to-Consumer and Content Licensing trailed estimates, he added.

The streaming subscriber count came in at 205.6 million, exceeding the consensus estimate of 204.7 million, the analyst noted. The outperformance, according to the analyst, came about due to higher-than-expected net adds for Disney+, catalyzed by Hotstar and U.S., he said.

Net adds at Hulu and ESPN+ were less than expected, the analyst said.

Related Link: How To Play Disney's Stock Following Q2 Earnings

Delving on the outlook, the analyst noted that the company was confident about its domestic parks business but warned of lower operating income at Asia parks due to Hong Kong Disneyland shutdown for the first three weeks of April.

The company expects a $900 million year-over-year increase in DTC content spend and higher Disney+ subscription numbers in the second half, the analyst said.

The price target reduction was due to peer multiple resetting, Nispel clarified.

"We continue to see DIS as the only asset we want to own in Media given the platform of DTC products, relatively strong linear brands, and ability to tie content and experiences together with Parks, which should result in strong growth for many years," the analyst said.

Disney Price Action: Disney stock traded 3.9% lower at $101.07 in Thursday's premarket session, according to BenzingaPro data.

Related Link: Benzinga Poll: Netflix, Disney+, Hulu Or HBO Max - Which Streaming Platform Has The Best Shows?