The House of Mouse roared Thursday, when Walt Disney Co. announced its best financial results since the start of the pandemic, hurtling its shares up 5% in after-hours trading Thursday and the stock was still up Friday.
Analysts are lauding across-the-board earnings and revenue that topped out at 50 cents a share ($918 million in net income) and $17 billion in revenue.
streaming service Disney+ exceeded forecasts to reach 116 million subscribers, while the television networks such as ESPN and ABC reported sales of $6.96 billion, and Disney’s theme parks and product sales segment reported $4.34 billion in revenue as it slowly reopened in the U.S. and abroad in the wake of the pandemic.
“We believe that Disney’s multiple is driven by momentum in [direct-to-consumer] – most notably Disney+ subscribers,” Michael Nathanson of Moffett Nathanson said in a note Friday. He forecasts Disney’s DTC revenue will nearly triple from $16.5 billion in fiscal 2021 to $46.6 billion in fiscal 2026 on “massive ramping in Disney+ subscribers and pricing power in high-RPU markets.”
What Needham & Company analyst Laura Martin liked most about the quarter was the performance of Disney’s direct-to-consumer business (DTC), the cornerstone of Disney CEO Bob Chapek’s corporate strategy. Martin, who maintained a hold on the company’s stock in an Aug. 13 note, pointed to $4.26 billion in revenue for DTC, up 57% year-over-year, and 174 million total subscribers.
In raising its price target to $210 and maintaining an outperform rating on Disney, Macquaire Capital analyst Tim Nollen highlighted the addition of 8.7 million subscriptions to 116 million amid competition from Netflix Inc.
and Amazon.com Inc.
“Disney+ is off to a very strong start, which we believe is the key variable governing stock performance,” Cowen Inc. analyst Doug Creutz said in an Aug. 13 note that maintained a perform rating and price target of $147.
“We still have reservations about the long-term strategy, particularly the wisdom of the Fox acquisition, and we think the company will eventually recover from current pandemic-related macro difficulties,” Creutz continued. “However, valuation appears to fully discount both an economic recovery and accelerated profit progress at the company’s DTC segment.”