The Walt Disney Co.’s top media dominance is put to the test when it reports results before the bell on Tuesday. Shares are up 28% this year and 4% in May. But it hasn’t been an easy road for the entertainment giant as it battles activist investors Nelson Peltz and Trian Partners in a bitter proxy battle. Analysts surveyed by the London Stock Exchange expect Disney’s second-quarter earnings per share to be $1.10, with total revenue of approximately $22.11 billion. “We expect Q2 on DIS to reflect a continuation of the strong underlying momentum from Q1,” Bank of America analyst Jessica Reif Ehrlich wrote in an April report. Some Wall Street firms are more bullish on the company’s upcoming release. Last month, JPMorgan analyst David Karnovsky issued an overweight rating on the stock and raised his price target to $140 as recent cost-cutting plans and initiatives began to bear fruit. , up about 23% from Friday’s closing price. “While we are cautious about the media landscape due to pay TV sub-segment losses and advertising headwinds, Disney is our favorite among the group due to the company’s unique content, improving streaming financials and parks,” he said. Operations provide avenues for attractive capital deployment. Wells Fargo’s Steven Cahall raised his price target to $141 per share, implying a 24% upside for Disney. The end of the power battle is an opportunity for management to refocus on execution, including margins in its direct-to-consumer business. Deutsche Bank’s Bryan Kraft raised his price target to . At $130 a share, that means the stock could rise another 14%, he wrote: “Importantly, we believe the company has regained momentum and the risk of a negative earnings correction for the remainder of the year is relatively low. It is more likely to be a positive value. All eyes are on the company’s direct-to-consumer DTC business and whether it can become profitable or break even at some point this year remains top of Wall Street’s radar this earnings season. The business unit includes Disney+ and its Streaming portfolio. StreetAccount estimated that the business unit had 229.35 million subscribers and nearly 155 million Disney+ subscribers. The company lost 1.3 million subscribers during its last earnings call in February. Cahall said he expects subscriber numbers to increase by 5.5 million to 6 million in the second quarter, and he expects core net growth to rise in fiscal 2025 and 2026 as the company cracks down on password sharing like peer Netflix. Volumes will increase by 4 million annually. “We believe the market is returning to the 2005-2015 Disney valuation paradigm, given terminal value concerns,” wrote Evercore ISI analyst Vijay Jayant in an April report. With Disney’s creation out of sight, the company should trade at a modest premium to the market, Bank of America’s Ehrlich wrote in an April report that Disney is expected to save more than $7.5 billion. cost. The company still believes that the DTC business can achieve profitability in the fourth quarter, prompting analysts to raise the target price to $145, an increase of nearly 28% from last Friday, and maintain a buy rating.
