Walt Disney (NYSE:DIS)
BofA has lowered some of its expectations for Walt Disney (NYSE:DIS). However, the investment firm has reaffirmed its Buy recommendation on the Disney stock, stating that fundamental trends remain robust despite various obstacles.
Both Hurricanes and Inflation According to analyst Jessica Reif Ehrlich, the theme park attendance will be solid in the fourth quarter, despite the fact that Ian will have an effect on the company’s parks.
She said, “We anticipate several additional tailwinds including the return of international visitors, increasing park capacity in several geographies, and the growth in capacity and demand at cruise ships which should help mitigate any potential softness in consumer demand.” “We anticipate several additional tailwinds including the return of international visitors, increasing park capacity in several geographies, and the growth in capacity and demand at cruise ships.”
She emphasizes that the long-planned content ramp for Disney+ is now coming. As a result, they are anticipating an increase in core domestic subscribers. This pertains to the business of providing entertainment directly to consumers.
“We think this positions DIS+ well ahead of its ad-supported debut in December, for which we believe there is substantial advertiser demand (notwithstanding macro volatility),” she added. “We believe this positions DIS+ well ahead of its ad-supported launch in December.”
It is a consequence of lower predicted Disney+ net additions (to 8M from a prior 15M), reduced content revenues, and the effect of storm park closures that she has lowered Q4 revenue forecasts to $21.7B from a previous $22.2B. She is preserving projections for operating income for the media side. Still, Hurricane Ian has caused her to reduce the estimated operating income for the parks to $2.1 billion, down from $2.3 billion.
A reduction in market multiples results in an established price target of $127 on Disney stock, which still indicates an upside potential of 31%.
Disney stock is preparing for a staggered restoration of its regional park operations on Friday as Florida continues recovering from Hurricane Ian’s effects.
BofA reduces expectations but maintains a bullish stance on Disney stock in light of recent promising developments.
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