Needham analyst Laura Martin reiterates a Hold rating on Walt Disney Co
Longer-term, she believes DIS's asset mix of both digital and physical assets (i.e., an Omniverse) maximizes its economic value capture, which DIS benefits from generative AI, and that DIS will be a takeover target owing to its potential as a streaming winner and high-quality content libraries with a hit film and TV franchises to drive mass adoption.
Martin lowered her 3Q FY23 DIS estimates, owing primarily to Linear Networks (DMED) and items below operating income.
The analyst now expects 3Q DIS revenues of $14.7 billion (up 4% Y/Y, 2% below her prior estimate), OI of $3.2 billion (down 11% Y/Y, 14% below her previous estimate), and Adj EPS of $1.06 (down 3% Y/Y, 20% below her prior estimate).
Linear Networks: Martin estimates revenue of $6.9 billion (down 4% Y/Y and 4% below her previous estimate) and estimates OI of $1.85 billion (down 25% Y/Y and 22% below her last estimate).
DTC: Martin estimates revenue of $5.8 billion (up 15% Y/Y and no change) and an OI Loss of $760 million (improved by 28% Y/Y and no change).
Content Sales/Licensing and Other: Martin estimates revenue of $2.2 billion (up 2% Y/Y and no change) and an OI Loss of $200 million (down from $27 million in 3Q22 and no change).
Disney Parks, Experiences, and Products: Martin estimates revenue of $8.1 billion (up 9% Y/Y and no change) and OI of $2.3 billion (up 5% Y/Y and no change).
For FY23, Martin now estimates revenues of $90.1 billion (up 9% Y/Y, 0.6% below her prior estimate), OI of $12.6 billion (up 4% Y/Y, 4% below her initial estimate), and Adj EPS of $3.80 (up 8% Y/Y, 8% below her previous estimate).
For FY24, Martin maintains her estimates at revenues of $96.1 billion (up 7% Y/Y), OI of $16 billion (up 27% Y/Y), and Adj EPS of $5.49 (up 44% Y/Y).
Price Action: DIS shares traded higher by 0.50% at $89.45 on the last check Friday.
