Shares of The Walt Disney Company (DIS) are surging in pre-market trading following a healthy beat in its fiscal first-quarter results. Adjusted earnings per share (EPS) of $1.63 topped the consensus of $1.57, but trailed last year’s EPS of $1.76. Sales jumped 5% year-over-year to $25.98 billion, outpacing the consensus estimate of $25.6 billion.
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Investors are also eyeing CEO succession, as Bob Iger prepares to step down before year-end. Disney’s board is set to convene its quarterly meeting this week and is poised to name its next CEO. Josh D’Amaro, chairman of the Experiences division, has emerged as the frontrunner.
Key Results Highlights
Disney’s December quarter performance was bolstered by its thriving entertainment division that released a robust film slate like Avatar: Fire and Ash, and steady streaming growth, while its experiences segment set records for revenue and operating income.
Challenges included a 15-day YouTube (GOOGL) TV blackout of key channels, especially ABC and ESPN, which cut operating income by $110 million and fueled a 23% drop in the sports division from last year. Disney reaffirmed its guidance but cautioned on higher experiences costs from new attractions and cruise ships, plus “international visitation headwinds” at domestic parks.
Is Disney a Good Buy Right Now?
Ahead of the results, analysts remained highly optimistic about Disney’s long-term outlook. On TipRanks, DIS stock has a Strong Buy consensus rating based on 16 Buys and three Hold ratings. The average Disney price target of $137 implies 21.5% upside potential from current levels. Over the past year, DIS shares have lost 1.1%.
