Disney Analyst Expects Blockbusters Wakanda Forever, Avtar To Dominate Upcoming Quarterly Results

Keybanc analyst Brandon Nispel reiterated Overweight on The Walt Disney Co DIS with a $119.00 price target.
The analyst expected a significant focus from CEO Robert Iger around the uniqueness of DIS's IP: Black Panther: Wakanda Forever and Avatar: The Way of Water, the top two highest-grossing theatrical releases in 4Q22.
Nispel did not expect Iger to share plans for ESPN and Hulu or reveal his thoughts on M&A.
The analyst did not have a strong opinion on M&A. However, he believes DIS processes fairly broad optionality and ultimately believes its business, as is, can achieve greater profitability in the next three years vs. its previous peak in FY18.
Nispel expects the company to announce some restructuring, with reports post last quarter suggesting a hiring freeze was underway.
The analyst expects core Disney+ (U.S. and International) to outperform expectations, with less confidence on Disney+ Hotstar..
The analyst saw Hulu and ESPN+ coming in slightly below expectations as his churn data suggest some more significant churn impact from recent price increases.
Similarly, Nispel expects subscription revenue to be above consensus, offset by lower advertising revenue given the challenging macro and poor F4Q22 performance in viewership, despite the launch of Disney+ with ads.
The analyst believes Disney will reiterate its initial streaming subscriber targets and accelerate the path toward profitability with a pullback in marketing.
Domestic parks' OI should be at least in line (with CMCSA Corp CMCSA reporting some upside), while the global recovery and reopening of Hong Kong and Shanghai parks should provide a tailwind in FY23.
While many likely believe Parks is entering a recession and believe DIS is over-earning, Nispel thinks Disney parks provide a unique experience and command pricing power that does not appear broken, so no fixes are necessary.
Price Action: DIS shares traded lower by 1.35% at $109.22 on the last check Monday.

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