Disney Stock Dips Slightly Despite Bullish Post-Earnings Notes from Wall Street Analysts
A day after Disney revealed its fiscal first quarter 2025 results, which showed a rise in entertainment revenue, a slight decline in Disney+ subscribers, and increased revenue from ESPN, the company’s stock experienced a slight dip in value. Despite this, five Wall Street analysts shared relatively bullish post-earnings notes about Disney’s performance.
Content Spending Expectations Lowered for Fiscal Year 2025
In its February 5 filing, Disney, based in Burbank, announced a decrease in its planned content spending for the fiscal year. Initially expecting to spend $24 billion, the company revised this figure to around $23 billion for produced and licensed content, including sports rights. In the previous fiscal year, Disney spent $23.4 billion on content.
Disney’s stock was trading around $110 per share as of Thursday, reflecting investor sentiment following the earnings report.
Cost Cutting Measures Highlighted by CFO
During an earnings call, CFO Hugh Johnston discussed the company’s focus on identifying opportunities to spend money more efficiently. This is in line with the decision to lower content spending for the fiscal year.
Disney+ and Hulu Subscriber Numbers Update
As of December 2024, Disney+ had 124.6 million core subscribers, while Hulu had 53.6 million subscribers. Disney CEO Bob Iger noted a slight decline in Disney+ subscribers quarter-to-quarter but expressed satisfaction with the overall subscription numbers, especially considering recent price increases.
Wall Street Analysts’ Post-Earnings Notes
Various Wall Street analysts published research notes with positive outlooks on Disney’s fiscal quarter. Analyst reports included titles like “Smooth Seas Ahead?,” “Checking the Right Boxes,” “Winter Soldier,” and “Cruising to start the year.”
Analysts Positive Despite Challenges
Despite challenges like a modest decline in Disney+ subscribers and the need for direct-to-consumer growth, analysts from Bank of America and Morgan Stanley maintained positive outlooks on Disney. Both firms have “buy” ratings on Disney stock, with price targets of $140 and $130 respectively.
Bundling Opportunities and Focus on Direct-to-Consumer Growth
Disney executives highlighted the upcoming launch of the flagship ESPN streaming service as a potential bundling opportunity with Disney+ and Hulu. Strategies to improve customer growth through product and technology investments were also discussed.
Future Growth Expectations
Analysts from MoffettNathanson and Guggenheim reiterated their confidence in Disney’s long-term growth potential, with “buy” ratings and price targets of $140 and $130 respectively.
Overall Market Response
While revenue for content, sales, and licensing showed improvement compared to the previous year, some lingering questions remain, affecting the stock’s performance. Investors are looking for a balance between aggressive subscriber growth and expanding margins, a challenge that Disney faces in the current market environment.
In conclusion, despite a slight dip in stock value post-earnings, Disney remains optimistic about its future growth opportunities, particularly in the streaming and direct-to-consumer segments. Wall Street analysts continue to express confidence in Disney’s long-term potential, emphasizing the importance of achieving a balance between subscriber growth and profitability.