Analyst Jayant: Post-Print Sell-Off Reflects Investor Positioning, Not Concerns

Evercore ISI Group's Vijay Jayant lowered their price target on Disney (NYSE: DIS) by 1.5% from $130 to $128 on 2024/05/08. The analyst maintained their Buy rating on the stock.

Disney reported its Q2 2024 earnings on May 7th, and although they cut their price target, Jayant called the results "broadly healthy." Acknowledging that management's theme parks demand commentary did "give it some pause," Jayant added that, "at this point, their firm doesn't believe the company's earnings power has materially deviated from its prior expectations."

Commenting on the post-print sell-off, the analyst told readers that Evercore ISI Group believes that mostly reflected investor positioning and "consternation" around Parks starting to experience post-COVID demand normalization.

For Q2 2024, Disney reported an EPS of $1.21, which beat the Zacks Consensus Estimate of $1.12 and Q1 2023's $0.93 by 30.1%. The revenue came in at $22.08B, which missed the Zacks Consensus Estimate by 0.23% but beat Q1 2023's $21.82B by 1.2%. The company also repurchased $1B in stock and declared a $0.45 dividend, up 50% in value from Q1's dividend.

Looking ahead, management guided for 25% EPS growth for FY 2024, up from the prior guidance of 20% growth. They also expect free cash flow of $8B, with plans to beat the $7.5B annualized cost target and buy back $3B in stock by the end of the year.

Disney CEO Bob Iger commented on the strong performance in Q2, stating, "Our results were driven in large part by our Experiences segment as well as our streaming business." He also mentioned that entertainment streaming was profitable for the quarter, and the company remains on track to achieve profitability in their combined streaming businesses in Q4.

Other analysts also updated their ratings on Disney on May 8th. Barclays' Kannan Venkateshwar lowered their price target by 3.7%, from $135 to $130, but maintained their Strong Buy rating on the stock. UBS's John Hodulik also lowered their price target by 7.1%, from $140 to $130, while maintaining their Strong Buy rating on the stock.

It's worth noting that 100% of top-rated analysts currently rate Disney as a Strong Buy or Buy, with no analysts seeing it as a Hold. Furthermore, no analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Disney's upcoming year will deliver earnings per share (EPS) of $1.76. If the analysts are correct, Disney's next yearly EPS will be up by 89.1% on a year-over-year basis.

Since Disney's latest quarterly report, the stock price has remained unchanged. However, year-over-year, the stock has increased by 2.4%. During that period, Disney is trailing the S&P 500, which is up 25.4%.

Evercore ISI Group analyst Vijay Jayant is ranked in the top 35% out of 4,577 Wall Street analysts, with an average return of 3.3% and a 50% win rate. They specialize in the Consumer Cyclical, Consumer Defensive, and Communication Services sectors.

Disney, a mass media and entertainment conglomerate, is well-known for its film studio, Walt Disney Studios. The company also owns and operates the ABC broadcast network, cable television networks, publishing, merchandising, music, and theater divisions. Additionally, Disney provides direct-to-consumer streaming services such as Disney+, Star+, ESPN+, and Hulu. Founded in 1923, Disney is headquartered in Burbank, CA.

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