Disney's Q2 2023 Results: Analysts Bullish, Yet Wary of Recession Risk
Analysts' Predictions for Disney's Stock Prior to Earnings Release
The media titan, The Walt Disney Company (DIS), gears up to unveil its fiscal second-quarter results on Wednesday morning. Wall Street heavyweights are largely optimistic about this entertainment colossus's stock prospects.
A majority of the analysts tracking Disney rate the stock as a "buy", with an average price target of $120—a whopping 30% above the stock's Friday closing price. This suggests analysts believe shares will recover from their roughly 19% downturn since late February.
Visible Alpha forecasts a revenue figure of $23.17 billion for Q2, representing a 5% rise year-over-year, and adjusted earnings per share (EPS) to have declined by a penny to $1.20.
A Sturdy Q2 but Recession Warning on the Horizon
UBS analysts recently reaffirmed their "buy" stance in a preliminary earnings analysis, but dialed back their price target to $105 from $130. They anticipate a robust Q2, attributing it to the resilience in park attendance, the initial revenue boost from the new cruise ship, and solid sports advertising. However, these savvy analysts also caution about looming "recession risk" in the latter half of the fiscal year. This potential economic turmoil could disrupt advertising revenue and park visits.
Last quarter, Disney's revenue and profit surpassed forecasts, yet the company reported a slightly lower Disney+ subscriber count of 124.6 million, expecting another "modest decline" in Q2. As of Q2 2023, Visible Alpha calls for Disney+ subscribers to stand at 123.7 million.
Heads Up: Coming Q2 may bring joy, but a recession might cast a shadow over the second half of the fiscal year. Such economic downturns often lead to reduced consumer spending on discretionary items, like entertainment and travel, and a drop in advertising revenue. Disney's theme parks and cruise lines would likely feel the pinch, along with the company's advertising partners.
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As the Walt Disney Company (DIS) prepares to reveal its Q2 2023 results, a consensus among analysts leans towards buying the stock, with an average target price of $120. However, UBS analysts, while maintaining their buy stance, have lowered their price target to $105 due to the mounting risk of a recession that could impact advertising revenue and park visits in the latter half of the fiscal year, potentially jeopardizing the finance of investing in Disney's business.
