Disney Price Target Gets A Boost Following Q1 Beat: 'Mouse House Can Really Roar If…'

Walt Disney Company DIS shares took off after the entertainment giant reported above-consensus fiscal year 2023 first-quarter earnings.

Here’s a compilation of views from the Street:

Disney On Inning One: Disney is in inning one under Bob Iger, said Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth And Investment Management, apparently suggesting there is more to come.

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Gerber’s AdvisorShares Gerber Kawasaki ETF GK, an actively-managed exchange-traded fund, has Disney as its fifth biggest holding.

The company makes up 4.55% of the ETF’s weighting.

“The mouse house can really roar if managed correctly,” he said. “Iger and team are the ones to do it.”

Cramer Full Of Gratitude: CNBC Mad Money host Jim Cramer thanked Iger for delivering excellent news. “If I were Nelson Peltz, I would be thrilled with these developments,” Cramer added.

Activist investor Nelson Peltz has been waging a proxy war with Disney’s board. His Train Fund Management, in a recent letter, blamed the board for the recent share price declines, falling income and other examples of value destruction.

Train has been clamoring for a board set for Peltz or his son but Disney has been keeping it at bay.

KeyBanc Fairly Confident: Apart from the top and bottom-line beats, Disney Parks, Experience and Products segment’s operating income of $3.05 billion outperformed expectations of $2.65 billion and Disney Media and Entertainment Division’s operating loss of $10 million was smaller than the expected loss of $62 million, KeyBanc Capital Markets analyst Brandon Nispel said.

The smaller loss of the DMED division was due to lower marketing to direct-to-consumer business and the Linear business’ outperformance, the analyst said. On the flip side, advertising at DTC materially underperformed with an 8.5% year-over-year drop and core DTC subscribers, ESPN+ and Hulu also trailed expectations, he added.

The analyst noted that the company made marginal changes with respect to its 2023 guidance, with the moving pieces in the near term could be taken negatively.

As such, KeyBanc lowered its 2023 estimates but raised its estimates for 2024, citing its increased conviction on sustained momentum in DPEP and the $5.5 billion cost savings underway at DMED. Management commentary and restructuring were in line, the firm said.

KeyBanc also raised the possibility of the stock rally fading as it came away from a 45-minute callback with the Disney CFO with more questions.

“However, we're fairly confident Disney's Media future profitability will be greater in three years than it ever was, and feel Parks value is underappreciated,” Nispel said.

KeyBanc raised the price target for Disney shares by 9% from $119 to $130, attributing the revision to its higher 2024 estimates. The updated price target implies scope for a 16% upside from current levels. The firm has an Overweight rating on the shares.

Price Action: Disney shares closed Wednesday’s regular session up 0.13%, at $111.78, and added an incremental 5.42% to $117.84 in after-hours trading, according to BenzingaPro data.

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