Disney Q1 Earnings Preview: Media Company Battles DeSantis, Musk, Peltz

Media giant Walt Disney Co DIS will report first-quarter financial results after market close on Wednesday, Feb. 7, 2024.

Here's a look at the earnings estimates, what analysts are saying and key items for investors to watch.

Earnings Estimates: Disney is expected to report first-quarter revenue of $23.685 billion according to data from Benzinga Pro. The company reported $23.512 billion in revenue in the prior year period.

Disney reported fourth-quarter revenue of $21.24 billion, which was up 5% year-over-year, but missed Street estimates. Disney has beaten revenue estimates from analysts in seven of the last 10 quarters with three quarters missing.

Analysts expect Disney to report first-quarter earnings per share of 99 cents, which would be in line with the first quarter of the prior year. Disney has beaten earnings per share estimates in seven of the last 10 quarters, with two misses and one in-line report.

What Analysts Are Saying: Analysts praised Disney's cost-cutting measures and update on not selling off assets during its fourth quarter report.

"We see a breakup unlocking value, but can also see scope for better operating performance if the parks are clicking, and DTC is improving. Disney continues to actively seek new partners for ESPN, but other major steps seem back burner," Rosenblatt analyst Barton Crockett said.

Crockett had a Buy rating on Disney and lowered the price target from $114 to $112 in December.

Strong cash flow growth guidance from Disney for fiscal 2024 was a highlight for Morgan Stanley analyst Benjamin Swinburne.

"The primary drivers of this growth are the Experiences and DTC segments as well as incremental efficiency efforts," Swinburne said.

The analyst, who had an Overweight rating and price target of $105, said Disney's Experiences division is high growth and undervalued.

Key Items to Watch: All eyes could continue to be on Disney+ for the company once again in the first quarter.

Disney ended the fourth quarter with 112.6 million core Disney+ subscribers, which was up 7% quarter-over-quarter. The company reported it added seven million subscribers in the fourth quarter helped by demand for new movies and series on the platform.

The company said "Elemental," "The Little Mermaid," "Guardians of the Galaxy Vol. 3" and "Ahsoka" contributed to the growth.

The first quarter could paint a different picture with less highly anticipated releases on Disney+.

Benzinga previously shared that December featured no significant new releases for Marvel or Star Wars and limited holiday content, which could lead to cancellations.

Disney could also be up against the potential that people canceled their Disney+ and Hulu memberships related to a battle from the media giant against billionaire Elon Musk.

Disney paused advertisements on social media platform X, formerly known as Twitter, which is owned by Musk.

Musk called out Disney CEO Bob Iger at an event over the decision, which led to "Cancel Disney Plus" and "Cancel Hulu" as trending topics across social media.

Disney's DTC segment, which includes Disney+ has posted improving operating losses, but lower subscriber figures in the first quarter could lessen some of the momentum from the unit.

Along with battling Musk in the first quarter, Disney also has an ongoing battle against Florida Gov. Ron DeSantis.

A federal judge recently dismissed a First Amendment challenge from Disney against DeSantis and the board of the Reedy Creek district that houses the Disney World theme park.

Disney appears ready to challenge and continue fighting in its battle against DeSantis.

"This is an important case with serious implications for the rule of law, and it will not end here," the company said. "We are determined to press forward with our case."

Disney remains in a battle with the Central Florida Tourism Oversight District over land user agreements. Disney has asked the court to void the creation of the tourism district.

Speaking of battles, Disney also faces a continued battle from activist investor Nelson Peltz, the CEO and founder of Trian Partners.

Peltz nominated new board of director candidates for Disney and continued to push for more changes at the company as a leading shareholder.

Disney might provide comment on the ongoing battle Wednesday and an update on the nominees for the company’s board of directors.

DIS Price Action: Disney shares were down 0.49% to $96.65 on Monday at market close versus a 52-week trading range of $78.73 to $118.18. Disney shares are up 7% year-to-date in 2024. Disney shares are down 14% over the last year.

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