Barclays's Kannan Venkateshwar raised their price target on Disney (NYSE: DIS) by 8% from $88 to $95 on 2024/02/08. The analyst maintained their Hold rating on the stock.
Venkateshwar's decision to raise the price target came after reviewing Disney's Q1 2024 earnings, which were reported on February 7th. According to the analyst, the results exceeded expectations, particularly in terms of operating income and free cash flow. Venkateshwar attributed this success to expenses coming in below estimates, especially in the linear segment.
However, Venkateshwar also expressed caution about the management's announcements, stating that they need to be supported by specific details and an execution path for sustained valuation credit. This suggests that while the Q1 results were positive, there may be some skepticism about the company's future plans.
In Q1 2024, Disney reported earnings per share (EPS) of $1.22, beating the Zacks Consensus Estimate by 25.77% and showing a significant increase from Q1 2023's $0.99. The company's revenue for the quarter was $23.55B, slightly missing the Zacks Consensus Estimate but still surpassing Q1 2023's $23.51B. Disney also reported a decrease in Disney+ subscribers, with 111.3M at the end of the quarter compared to 112.6M in the previous quarter.
Despite the decline in subscribers, Disney's free cash flow showed a significant improvement. The company reported $886M in free cash flow for Q1 2024, up from $(2.155B) in Q1 2023. Additionally, Disney announced a new share repurchase program targeting $3B in repurchases for FY 2024 and increased its quarterly dividend by 50% to $0.45.
Looking ahead, Disney's management provided guidance for Q2 2024 and FY 2024. For Q2, they expect 5.5M to 6M net new Disney+ subscribers and ongoing positive momentum in annual revenue per user (ARPU). For FY 2024, the company aims to meet or exceed its $7.5B annualized savings target, achieve EPS growth of 20%+, generate $8B in free cash flow, and reach profitability for its combined streaming businesses in Q4 2024.
Disney's CEO, Robert A. Iger, expressed confidence in the company's performance, highlighting the strong results across all business segments and the potential for significant growth and success in the future. Iger emphasized Disney's focus on fortifying ESPN, building a profitable streaming business, reinvigorating film studios, and driving growth in parks and experiences.
In addition to Barclays's Kannan Venkateshwar, other analysts also updated their ratings for Disney on February 8th. Deutsche Bank's Bryan Kraft raised their price target by 7.8% to $125 and maintained a Strong Buy rating on the stock. Macquarie's Tim Nollen raised their price target by 10.6% to $104 and maintained a Hold rating. Wells Fargo's Steven Cahall raised their price target by 11.3% to $128 and also maintained a Strong Buy rating.
Overall, among top-rated analysts, 87.5% currently rate Disney as either a Strong Buy or Buy, while 12.5% consider it a Hold. None of the analysts recommend selling the stock. The consensus forecast among analysts suggests that Disney's upcoming year will deliver EPS of $2.56, representing a significant increase of 56.2% compared to the previous year.
Since Disney's latest quarterly report on February 6th, the stock price has increased by 11.3%. However, on a year-over-year basis, the stock is down 1.1%. During this period, Disney has underperformed the S&P 500, which has declined by 21.4%.
Barclays analyst Kannan Venkateshwar is ranked in the top 25% of Wall Street analysts by WallStreetZen, with an average return of 3.6% and a 53.8% win rate. They specialize in the Communication Services and Consumer Defensive sectors, among others.
Disney, a mass media and entertainment conglomerate, is well-known for its film studio, Walt Disney Studios. The company operates the ABC broadcast network, cable television networks, publishing, merchandising, music, and theater divisions. It also offers direct-to-consumer streaming services such as Disney+, Star+, ESPN+, and Hulu. Founded in 1923, Disney is headquartered in Burbank, CA.
