Disney Analysts Bullish After Q1 Earnings: 'The Magic's Back'

The Walt Disney Company DIS reported first-quarter financial results Wednesday, and the media giant beat analyst estimates for earnings per share came in shy on revenue.

Disney made several announcements alongside earnings during its conference call, and Wall Street analysts are breaking down the results and what's ahead for the House of Mouse.

The Disney Analysts: Bank of America analyst Jessica Reif Ehrlich has a Buy rating and raised the price target from $110 to $130.

Macquarie analyst Tim Nollen has a Neutral rating and raised the price target from $94 to $104.

Needham analyst Laura Martin upgraded Disney from Hold to Buy and initiated a $120 price target.

KeyBanc analyst Brandon Nispel has a Sector Weight rating and no price target.

Related Link: Disney Lands Taylor Swift Concert Film, Nick Saban Joins ESPN, ‘Moana 2’ Heads To Theaters In November: Key Announcements From Bob Iger

Bank of America On Disney: Disney’s first-quarter results were strong and show the company is "bringing the magic back," Ehrlich said in a note.

"We are encouraged as Disney achieved significant cost reductions across the business and is on track to meet or exceed their $7.5 billion annualized savings target," the analyst said.

The analyst highlighted Disney's increased dividend payout and plans for its first share buyback since 2018.

Ehrlich was also encouraged with Disney's guidance to add 5.5 to 6 million Disney+ subscribers in the second quarter and plans to reach streaming profitability in the fourth quarter.

"In a little over a year since returning to the company as CEO, Bob Iger's actions are already having an impact."

Disney has "best-in-class premiere assets,” she said.

Macquarie On Disney: Disney’s trajectory could be improving, Nollen said.

"Disney may be turning a corner; at least it is heading into the proxy battle from a position of greater strength," Nollen said.

The analyst highlighted Disney’s announcement of a joint venture for a sports streaming platform with Fox Corporation FOX FOXA and Warner Bros. Discovery WBD and the company's planned August 2025 launch of an ESPN standalone streaming platform.

"This will include more features like betting, fantasy leagues, e-commerce sales, and personalization."

Disney is refilling its content pipeline with several new films announced Wednesday and the exclusive streaming of Taylor Swift's concert film on Disney+ with additional content, he said.

"Our heads are spinning from the newsflow, nearly all positive. We believe in the long-term upside, but still question the offset to the linear networks from DTC advance."

Needham On Disney: Declaring "the magic's back" at Disney, Martin said she “finally” upgraded the media stock.

Disney’s cost savings, DTC breakeven guidance, the new sports joint venture, a higher dividend payout, the $1.5-billion investment in Epic Games, $3-billion share buyback and landing the Taylor Swift concert film on Disney+ were all highlighted by the Needham analyst.

"Disney's new CFO, Hugh Johnston, stated two times that Disney is ‘on track to meet or exceed $7.5 billion in costs savings.' ‘Exceed' was new language implying that this is more likely now," Martin said. "He said that once segment leaders tart focusing on cost efficiencies, they tend to find more each quarter."

In the long term, Needham believes Disney’s digital and physical asset mix maximizes “the economic value capture,” the analyst said, adding that Disney benefits from generative AI and will be a takeover target.

KeyBanc On Disney: Cost-cutting efforts from Disney are leading to improved results for the media company, Nispel said.

"We see reasons to be positive and reasons to be skeptical," the analyst said. "Positively, Disney guidance on long-term double-digit margins for DTC and the return to positive core Disney+ net adds were what the bulls wanted."

Cash content spend can't continue to trend lower and keep business segments sustainable, he said.

"We think the stock is likely to trade higher as estimates may be done moving lower, though we are not of the view that any of Disney's major issues are fixed, informing our view."

Disney has several headwinds coming, including declines at Linear Networks, difficult comparable sales for domestic parks, movies performing poorly at the box office and timing of DTC profitability, Nispel said.

"We view Disney as fairly valued."

DIS Price Action: Disney shares are up 11.82% to $110.86 on Thursday versus a 52-week trading range of $78.73 to $118.18.

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