The Walt Disney Company
Here is a look at what analysts are saying about the report and what's ahead for the media conglomerate.
The Disney Analysts:
- Raymond James analyst Ric Prentiss has an Outperform rating and a price target of $93.
- Rosenblatt analyst Barton Crockett has a Buy rating and raises the price target from $103 to $114.
- Morgan Stanley analyst Benjamin Swinburne has an Overweight rating and a price target of $105.
- Needham analyst Laura Martin has a Hold rating and no price target.
- Bank of America analyst Jessica Reif Ehrlich has a Buy rating and a price target of $110.
- Goldman Sachs analyst Brett Feldman has a Buy rating and lowers the price target from $125 to $120.
The analyst sees more free cash flow growth coming.
"Expect FCF to grow significantly vs. FY23, approaching levels last seen pre-pandemic," Prentiss said.
The analyst said the direct-to-consumer segment saw good Disney+ adds and improved operating losses.
Rosenblatt: Disney's non-ESPN linear channels see advertising down double-digits.
"But event that, Disney asserted, was not as bad as they had feared, and was improving somewhat," Crockett said.
The strong execution in Q4 could ease calls to break up the company for some time, he explained.
"We see a breakup unlocking value, but can also see scope for better operating performance if the parks are clicking, and DTC is improving. Disney continues to actively seek new partners for ESPN, but other major steps seem back burner."
Morgan Stanley: The media company is not sitting still and hard at work on rebuilding profitability, Swinburne said.
The analyst said guidance for 40% operating cash flow growth in fiscal 2024 exceeds expectations.
"The primary drivers of this growth are the Experiences and DTC segments as well as incremental efficiency efforts," Swinburne said.
Disney's Experiences division is high growth and undervalued, the analyst said.
"The incremental efficiency steps announced today should help address the under-earning elements of its Media business, while product enhancements in streaming and strategic partnerships at ESPN in success will re-rate these assets."
Swinburne also highlighted the potential return of Disney's dividend and share buybacks as items to watch.
Needham: Disney shared strong cost-cutting initiatives. These measures could be important in the activist battle with Nelson Peltz, Martin said.
Martin called the growth in Disney+ subscribers "impressive" with the company adding around seven million subscribers.
The analyst highlighted Disney's plan for a strong lineup of blockbuster films moving forward.
"DIS is focused on strengthening the creative output of its film studios by focusing heavily on its core brands and franchises. DIS will concentrate on fewer projects with higher quality."
Bank of America: Q4 saw Disney beat earnings per share estimates. The company missed revenue targets, leaving the quarter mixed for Ehrlich.
"While several strategic questions remain, we remain confident in Bob Iger's ability to navigate the company through this transition period," Ehrlich said.
Free cash flow was a "positive surprise" for the analyst, with fiscal 2024 cost savings higher than anticipated.
"The FCF outlook was well above our prior forecast and given management commentary surrounding content spending, we believe this positions the company well to sustainably grow FCF in the coming years."
Profitability for the DTC segment also is within reach for the company according to Disney, which was a positive for Ehrlich.
Goldman Sachs: Cost savings initiatives are the "most notable area of traction" for Disney according to Feldman.
"Our key takeaway from the report and call is the same as last quarter, which is that DIS is making progress against management's lengthy to-do list," Feldman said.
The analyst said management increased its costs savings and sees DTC hitting profitability in 2024, leading to ramped-up free cash flow.
Feldman said the discussion on a partner for ESPN continues to be a topic to watch.
"While management did not announce a partner for ESPN, it reiterated that it has seen strong interest from parties that could assist with marketing, technology, distribution and new content."
Disney Price Action
Disney shares are up 7% to $90.79 on Thursday versus a 52-week trading range of $78.73 to $118.18.
