Disney (DIS) Stock Gains on Disney+ Beat and Raised Prices, Earns Upgrade to Buy

August 11, 2022 6:27 AM EDT
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Price: $99.40 +3.70%

Rating Summary:
    25 Buy, 20 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 15 | New: 37
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Shares of Disney (NYSE: DIS) are up more than 8% in premarket trading Thursday after the company reported stronger-than-expected Disney+ subscriber numbers for Q3.

The company reported Q3 adjusted EPS of $1.09, up from 80c in the year-ago period and above the consensus estimates of 96c per share. Revenue came in at $21.5 billion, up 26% YoY and just above the analyst consensus of $21 billion.

Media and entertainment distribution revenue stood at $14.11 billion in the quarter, up 11% YoY, though below the consensus projection of $14.33 billion. Disney reported parks, experiences and products revenue of $7.39 billion, up 70% YoY and topping the expectations of $6.65 billion.

Disney reported 152.1 million Disney+ subscribers in the three-month period, up 31% YoY and above the estimated 148.4 million.

“With 14.4 million Disney+ subscribers added in the fiscal third quarter, we now have 221 million total subscriptions across our streaming offerings,” said CEO Bob Chapek.

Guggenheim analyst Michael Morris upgraded Walt Disney from Neutral to Buy with a price target of $145 (from $110).

Credit Suisse analyst Douglas Mitchelson sees a stronger long-term case for Disney after the company raised streaming prices.

“We still believe Disney+ will be a profitable and valuable platform, and it is currently too discounted within Disney’s valuation. Macro certainly elevates uncertainty for FY23, though Parks momentum, including easy international parks and domestic visitation comps and the new cruise ship, suggests the potential for FY23 growth even if the consumer environment weakens notably. Over time we see potential for Disney to recapture its premium valuation on a post-recession profitability that we expect will be above Street expectations,” Mitchelson said in a client note.

Goldman Sachs analyst Brett Feldman expects a positive market reaction to DIS’s revised F2024 Disney+ subscriber targets, planned price increases, and the durability of DIS’s Parks business.

Feldman also raised the price target to $140 from $130.

By Senad Karaahmetovic

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