What to Look For When Disney Reports Q1 Earnings After the Close

February 7, 2017 by Chris Lange

Walt Disney Co. (NYSE: DIS) is scheduled to release its fiscal first-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters are $1.50 in earnings per share (EPS) and $15.26 billion in revenue. In the same period of last year, the entertainment giant posted EPS of $1.63 and $15.24 billion in revenue.

There are a lot of things going in Disney’s favor, even if there has been a huge drag from ESPN losses on cord cutters. ESPN lost a half-million subscribers in October alone, and there are fears that cord-cutting trends will only continue in the year ahead. What if analysts and investors were just too focused on ESPN? Or what if cord cutters just do not keep following the rapid trends? Deutsche Bank in November noted that the ESPN subscriber declines have improved and should improve further.

One of the big wild cards for the Mouse House has been its beloved Star Wars franchise, which it purchased for $4 billion. Unless real aliens start arriving on earth, this science fiction universe has literally endless life ahead, and Disney is the one company that can capitalize on Star Wars more than any other. We can look forward to strong numbers from this franchise in this upcoming report.

On December 31, 2016, S&P reiterated its Buy rating and $110 price target on Disney. After an interstellar opening weekend for the Star Wars feature “Rogue One,” JPMorgan reiterated its Overweight rating and it named Disney as one of its top picks for 2017. The firm said:

We believe this impressive opening weekend performance of the first spin-off film in the Star Wars universe solidifies it as a major franchise for Disney with great longevity that is also likely to translate into solid near-term Consumer Products sales and longer-term greater attendance and per-cap spend at the two Star Wars Lands at Disney World and Disneyland currently being built that we expect to open in 2019 at the earliest. We remain positive on Disney as one of our top picks for 2017, as the success of the company’s films and franchises continue the company’s multi-year, cross-divisional, hugely profitable strategy that should lead to outsized growth compared to peers.

A few other analysts have weighed in on Disney ahead of the earnings report:

  • Guggenheim reiterated a Neutral rating with a $118 price target.
  • Jefferies reiterated a Buy rating with a $100 price target.
  • Morgan Stanley has an Overweight rating with a $124 price target.
  • Piper Jaffray has a Buy rating with a $130 target price.
  • Evercore ISI has a Buy rating with a $120 price target.
  • RBC Capital Markets has an Outperform rating with a $130 price target.
  • Barclays has a Hold rating with a $99 price target.
  • Citigroup has a Buy rating with a $124 price target.
  • Needham reiterated a Hold rating.
  • Goldman Sachs has a Buy rating with a $134 price target.
  • JPMorgan reiterated an Overweight rating with a $124 price target.

So far in 2017, Disney has outperformed the broad markets, with the stock up over 5%. Over the past 52 weeks, the stock is up 18%.

Shares of Walt Disney were trading at $109.37 on Tuesday, with a consensus analyst price target of $114.57 and a 52-week trading range of $86.25 to $111.99.

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