Disney's Strong Quarter Keeps Investors Happy, But Its 'Biggest Moment' Awaits

Walt Disney Co DIS reported fiscal fourth-quarter results that kept multiple Street analysts bullish on the stock.

The Analysts

Morgan Stanley analyst Benjamin Swinburne maintains an Overweight rating on Disney with a $160 price target.

UBS analyst John Hodulik maintains at Buy, $155 price target.

CFRA analyst Tuna Amobi maintains at Buy, price target lifted from $150 to $160.

Morgan Stanley: Strong Close To 2019

Disney ended fiscal 2019 on a positive not with adjusted EPS coming in better than expected. Swinburne's key highlights from the quarter:

  • Studio EBIT beat expectations despite lower than expected contributions from the acquisition of Fox assets.
  • ESPN Plus and Hulu subscribers continued to grow.
  • Subscriber pressure in the Media Networks were offset by strong ad sales and lower expenses.

On the other hand, attendance and per cap growth at parks fell short of expectations which may be due to consumers holding off visits ahead of the launch of new attractions.

Looking forward to next week's launch of Disney+, Morgan Stanley's proprietary AlphaWise survey points to an improvement in interest for the streaming platform. Specifically, consumer interest rose from 37% in February to 44% in September.

UBS: DTC A Key Focus

Disney's direct-to-consumer and international (DTCI) segment lost $740 million in operating income in the reported quarter and management expects to lose another $800 million in the new quarter. Hodulik said the DTC business was a "major focus" of the conference call and management offered new details, including a new distribution partnership with Amazon.com, Inc. AMZN

Management reaffirmed its prior Disney+ guidance and discussed an initiative to include sports content at ABC.

"We continue to believe the success of DTC efforts will drive Disney shares," Hodulik wrote in a note.

CFRA: Premium Valuation

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