Disney stock could benefit from box office and streaming strength: Analyst says DTC is poised 'for continued revenue and earnings growth' – Walt Disney (NYSE:DIS)

TO Walt Disney Company DIS One analyst says the company's push into blockbusters and streaming growth may help offset experiences and linear weakness when the company reports fourth-quarter financial results in November.

Disney analystGoldman Sachs analyst Michael Ng reiterated his Buy rating on Disney and cut his price target to $120 from $124.

The analyst's conclusionsDisney's fourth-quarter financial results could see strong subscriber growth for streaming and box office strength, likely offsetting headwinds from Experiences and the DirecTV shutdown, Ng said in a new note to investors.

Also Read: Disney Q3 Earnings: Revenue and EPS beat expectations, streaming business turns profitable, ESPN revenue boosts strong

“Subscriber momentum and recent price increases should put Direct-to-Consumer on track for continued revenue and earnings growth,” Ng said.

The analyst highlighted Disney+ bundles, promotional offers and the streaming premiere of “Inside Out 2” on the platform on Sept. 25 as catalysts that could boost subscribers. “Inside Out 2,” the highest-grossing animated film of all time, will help the box office segment, the analyst added.

Ng forecasts Disney will add 3.5 million net core subscribers to Disney+ in the quarter, compared with consensus estimates of 1.8 million.

Potential negatives for the quarter include the Experiences segment and the two-week blackout of Disney channels on DirecTV. The analyst sees a potential $90 million hit to membership fees due to the DirecTV blackout.

Ng expects Disney to post fourth-quarter earnings of $1.16. The Wall Street consensus estimate is $1.09 based on the data. from Benzinga Pro. The company has beaten analysts' earnings estimates in five consecutive quarters.

The analyst expects fourth-quarter revenue of $22.47 billion, versus the Wall Street consensus estimate of $22.29 billion. The company has missed analysts' revenue estimates in four of the past five quarters.

Ng's $120 target price is based on a sum-of-the-parts valuation of Disney with multiples applied to the company's Parks and Experiences, Consumer Products, Linear Networks, Content Sales and Licensing, Sports and DTC business lines.

Price Action: Disney shares are trading at $93.92 on Wednesday versus a 52-week trading range of $78.73 to $123.74. Disney shares are up 4% year to date in 2024.

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