As Hurricane Milton barrels toward central Florida, Goldman Sachs estimated that the newly classified Category 5 storm could have an adverse impact of $150 million to $200 million on Walt Disney (NYSE: DIS) World's Parks and experiences in the current quarter.
This potential loss is primarily attributed to the expected drop in domestic attendance at Walt Disney World, with projections now suggesting a 6% year-over-year decline in attendance growth, compared to an earlier estimate of a 2% decline.
Drawing Parallels To Hurricane Irma
Analyst Michael Ng has drawn comparisons to past hurricanes, particularly Hurricane Irma in 2017, which resulted in significant operational disruptions for Walt Disney Co.
Irma caused a $100 million hit to operating income and led to a 3 percentage point decline in domestic parks attendance. The storm forced the closure of Walt Disney World for two days, along with multiple cancellations of cruise ship itineraries.
Based on Disney's 10% compound annual growth rate (CAGR) in its Parks & Experiences segment since 2017, Ng scaled up his estimates for Hurricane Milton's potential impact, reflecting the company's expanded operations and increased revenue base.
The report notes that hurricanes like Hurricane Ian (2022) and Hurricane Matthew (2017) also caused notable disruptions, leading to adverse impacts of $65 million and $70 million, respectively, on Disney's operating income.
These figures suggest that storms of Milton's magnitude can have a short-term impact on Disney's financials, particularly if they force park closures or disrupt cruise line schedules.
Anticipated Short-Term Disruptions And Long-Term Prospects
As of Monday, Walt Disney World is still operating under normal conditions, with no official closures announced. However, Orlando International Airport has already confirmed that it will halt commercial operations starting Wednesday morning.
Tampa International Airport plans to suspend operations earlier on Tuesday morning. Given that the National Hurricane Center (NHC) has upgraded Hurricane Milton to a Category 5 storm, the strongest classification, with projected landfall along Florida's Gulf Coast, further disruptions to Disney's operations seem likely.
The report highlights that Disney parks have historically closed for one to two days during major hurricanes. For instance, both Hurricane Dorian (2019) and Hurricane Ian resulted in brief closures of Walt Disney World, with minimal longer-term damage but substantial short-term attendance disruptions.
Goldman Sachs remains relatively optimistic about the company's long-term financial outlook.
The investment bank has revised its fiscal 2025 earnings per share (EPS) estimate to $5.14, down slightly from the previous estimate of $5.22, mainly accounting for the anticipated impacts of Hurricane Milton. This new EPS projection is still roughly in line with market expectations, with the consensus at $5.13.
Despite the short-term challenges posed by Hurricane Milton, Ng's report maintains a steady outlook for Disney's financial performance in fiscal 2026 and 2027. The EPS forecasts for 2026 and 2027 remain unchanged at $5.96 and $7.10, respectively, reflecting confidence in Disney's Parks & Experiences segment.
Goldman Sachs maintains a Buy rating on shares of Walt Disney Co. with a 12-month price target of $120, implying a 30% surge from current levels.