Walt Disney (DIS) Underlying Trends Remain Solid Despite Macro Volatility - BofA

Walt Disney's (NYSE: DIS) theme park attendance is expected to be strong in FY4Q, although there will be some impact from inflation and a brief park closure in Florida related to Hurricane Ian, according to BofA on Friday.

Analyst Jessica Reif Ehrlich, who has a Buy rating and a $127 price target on the stock, said they anticipate several additional tailwinds, including the return of international visitors, increasing park capacity in several geographies and the growth in capacity and demand at cruise ships "which should help mitigate any potential softness in consumer demand."

"In DTC, we expect core domestic subs to accelerate as DIS+ hits its content cadence exiting FY22. We believe this positions DIS+ well ahead of its ad-supported launch in December, for which we believe there is robust advertiser demand," wrote Ehrlich. "In our view, DIS remains well positioned within our M&E coverage universe and expect near term fundamentals to prove resilient."

Elsewhere, Needham & Company analyst Laura Martin, who has a Hold rating on Walt Disney, stated that for FY4Q22, although they are maintaining their revenue estimate at $21.2B (up 14% y/y), they lowered their OI estimate by 29%, to $1.9B (up 20% y/y).

Martin said it reflects Content Sales Licensing & Other OI guidance of $100mm below 4Q21 levels (a loss of $65mm) and "much higher DTC losses."

By Sam Boughedda

You May Also Be Interested In

• BofA Securities Starts ERock Inc (EROC) at Neutral
• Morgan Stanley Resumes Macy's (M) at Overweight
• ArcelorMittal (MT:NA) (MT) PT Raised to EUR65 at Jefferies