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Walt Disney

Walt Disney, a family entertainment company, reported better-than-expected earnings in the fiscal second quarter but missed analysts’ expectations for revenue and new subscribers, sending its shares down about 4% in extended trading on Thursday.

The world’s leading producers and providers of entertainment and information said its adjusted earnings-per-share rose $0.79, beating the Wall Street consensus estimates of $0.27. But Walt Disney’s overall revenue slumped 13% to $15.61 billion, missing the market expectations of $15.85 billion.

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Results for the quarter and six months ended April 3, 2021 were adversely impacted by the COVID-19 pandemic. The company said its subscribers for Disney+ came in at 103.6 million, missing analysts estimates of 109.3 million.

Following this, Walt Disney shares fell about 4% to $171.40 in after trading hours on Thursday.

Analyst Comments

“F2Q results – earnings well ahead on lower expenses across the board: Revenues were modestly ahead of our expectations, although below consensus and down 13% YoY, with lower than expected advertising revenues offset by Content Licensing, Parks, and Consumer Products ahead. Disney’s adjusted OI of $2.5bn compared to our estimate of roughly $1bn, and adjusted EPS of roughly $0.80 actually grew YoY by over 30%,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Looking ahead, COVID-related pressures in India are likely to weigh on F3Q/F4Q net Disney Plus Hotstar additions particularly if the IPL tournament is not able to resume. Disney also opted to push the launch of its Star Plus sports offering in Latin America to August from June.”

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Walt Disney Stock Price Forecast

Sixteen analysts who offered stock ratings for Walt Disney in the last three months forecast the average price in 12 months of $215.31 with a high forecast of $230.00 and a low forecast of $167.00.

The average price target represents a 20.73% increase from the last price of $178.34. Of those 16 analysts, 14 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $210 with a high of $250 under a bull scenario and $135 under the worst-case scenario. The firm gave an “Overweight” rating on the family entertainment company’s stock.

Several other analysts have also updated their stock outlook. Walt Disney had its price target upped by equities research analysts at Wells Fargo & Company to $219 from $201. The firm currently has an “overweight” rating on the entertainment giant’s stock. Evercore ISI boosted their price objective to $210 from $200. Citigroup boosted their price objective to $230 from $205 and gave the company a “buy” rating. Bank of America reiterated a “buy” rating and issued a $223 price objective.

Disney reported a mixed fiscal 2021 second quarter as revenue fell short of FactSet consensus and operating income came in well ahead of Street expectations. Disney+ added over 8 million customers to end the quarter of 104 million subscribers, well below the 21 million new subscribers added in the fiscal first quarter,” noted Neil Macker, senior equity analyst at Morningstar.

“While subscriber growth has slowed down, we still expect robust long-term growth for the service. The parks and theatrical businesses were hammered again by the pandemic as revenue collapsed by 68% and 93%, respectively, versus a year ago. We are maintaining our wide moat and our $154 fair value estimate.”

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