Walt Disney's DTC Business Outshined, Analysts Expect Momentum To Continue

Shares of Walt Disney Co DIS remained volatile in early trading on Thursday, despite the company reporting upbeat quarterly results.

The company reported its quarterly results amid an exciting earnings season. Here are some key analyst takeaways.

Goldman Sachs On Walt Disney

Analyst Michael Ng maintained a Buy rating, while lifting the price target from $139 to $140.

Walt Disney's direct-to-consumer (DTC) business generated EBIT that beat consensus by $293 million and grew by $431 million year-on-year, "putting DIS well on track to exceed its $1.0 bn F2025 DTC EBIT guidance," Ng said in a note.

Experiences EBIT beat of $3.1 billion, with domestic attendance down 2% but international up 4%, the analyst stated. Although management reiterated their full-year guidance of high single-digit percentage earnings growth, they expressed "greater confidence in the forecast," he added.

Piper Sandler On Walt Disney

Analyst Matt Farrell reiterated a Neutral rating and price target of $115.

Walt Disney's fiscal first quarter revenues came in marginally ahead of expectations, "with operating income nicely ahead of consensus," Farrell said. Despite the strong start to the year, management reiterated their EPS growth guidance for the year, he added.

The company also projected a sequential decline in Disney+ subscribers in the March quarter, the analyst stated. Walt Disney seems to be "largely executing to plan," but needs to demonstrate "continued execution," he further wrote.

BofA Securities On Walt Disney

Analyst Jessica Reif Ehrlich reaffirmed a Buy rating and price target of $140.

Walt Disney's revenues grew 5% to $24.7 billion, while operating income climbed 31% to $5.1 billion, Ehrlich said. Adjusted earnings of $1.76 per share came in "well above our forecast of $1.40," she added.

The latest results have given management "incremental confidence in its ability to hit the full-year targets," she stated. In the Experiences segment, the fiscal first-quarter results, easier comps in the back half, the launch of a new cruise ship and a stronger consumer "underpin its 6-8% operating income target," Ehrlich further wrote.

Check out other analyst stock ratings.

Needham On Walt Disney

Analyst Laura Martin maintained a Buy rating and price target of $130.

The impact of Walt Disney's softening linear TV business was more than offset by higher operating income from its DTC business, Martin said. The company trimmed its fiscal 2025 content budget to $23 billion, from $24 billion, "which they attributed to ongoing cost structure discipline," she added.

Walt Disney expects DTC's operating profit to cross $1 billion in fiscal 2025, the analyst stated. "This strong profit growth suggests that Disney+ and Hulu are on track to achieve long-term sustainable profitability," Martin further wrote.

Raymond James On Walt Disney

Analyst Ric Prentiss reiterated a Market Perform rating.

Walt Disney reported non-GAAP adjusted earnings of $1.76 per share, beating consensus of $1.46 per share, Prentiss said. The outperformance was "driven by big beats in the DTC and Sports segments," he added.

"We still believe Disney is the best positioned Traditional Media company for the continued transition from Linear TV to Streaming given its ownership of two scaled streaming services, large exposure to the strong-performing sports segment, significant Parks cash flows, and in our opinion the best portfolio of franchise IP in Media," the analyst wrote.

KeyBanc Capital Markets On Walt Disney

Analyst Brandon Nispel reaffirmed a Sector Weight rating on the stock.

While DTC's profitability improved and Disney+ grew subscriptions in the fiscal first quarter, management reiterated their guidance, which suggests "either conservatism or 2H pressure," Nispel said. The guidance implies negative subscriptions at Disney+ in the fiscal second quarter and "profitability for the year doesn’t improve q/q," he added.

"Further, we’re expecting Disney+ to become DIS main DTC platform, which makes us question the future of Hulu," the analyst wrote. With subscription trends remaining stable, the company is reliant on pricing, "for which we question the value being delivered as content spend isn’t expect to increase in ’25," he added.

DIS Price Action: Shares of Walt Disney had risen by 0.62% to $111.23 at the time of publication on Thursday.

Read More: Disney Cuts Content Budget By $1 Billion As It Pushes For Efficiency: House Of Mouse Says Too Early To Revise Guidance Despite Earnings Beat

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