- 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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