Disney Stock Could Benefit From Box Office Strength, Streaming: Analyst Says DTC Set 'For Continued Revenue And Profit Growth'

A Walt Disney Company (NYSE:DIS) analyst says the company's momentum in box office blockbusters and streaming growth can help offset Experiences and linear weakness when the company reports fourth-quarter financial results in November.

The Disney Analyst: Goldman Sachs analyst Michael Ng reiterated a Buy rating on Disney and lowered the price target from $124 to $120.

The Analyst Takeaways: Disney's fourth-quarter financial results could see strong subscriber growth for streaming and box office strength, likely offsetting headwinds of Experiences and the DirecTV blackout, Ng said in a new investor note.

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"The subscriber momentum and recent price increases should put Direct-to-Consumer on track for continued revenue and profit 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 increase subscribers. "Inside Out 2,” the highest grossing animated film of all time, will help the box office segment, the analyst added.

Ng forecasts Disney adding 3.5 million net core Disney+ subscribers in the quarter compared to consensus estimates of 1.8 million.

Potential negatives in the quarter include the Experiences segment and the two-week blackout of Disney channels on DirecTV. The analyst sees a potential $90 million headwind to affiliate fees from the DirecTV blackout.

Ng is forecasting Disney to have fourth-quarter earnings of $1.16. The consensus Street estimate is $1.09 according to data from Benzinga Pro. The company has beat earnings estimates from analysts in five straight quarter.

The analyst forecasts fourth-quarter revenue of $22.47, compared to a consensus Street estimate of $22.29 billion. The company has missed revenue estimates from analysts in four of the last five quarters.

Ng's price target of $120 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 trade at $93.92 Wednesday versus a 52-week trading range of $78.73 to $123.74. Disney stock is up 4% year-to-date in 2024.

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