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Macquarie Analyst Raises Disney's Price Target Amidst Media Industry Update

By Don Francis, Editor
May 14, 2024 9:24 AM UTC
Macquarie Analyst Raises Disney's Price Target Amidst Media Industry Update

Macquarie's Tim Nollen raised their price target on Disney (NYSE: DIS) by 2.9% from $104 to $107 on 2024/05/13. The analyst maintained their Hold rating on the stock.

In a Communications Services - Media sector review note, Nollen "updated media industry metrics and models as media network reporting season ends." The analyst highlighted that advertising trends improved, but linear subscribers continued to decline. Notably, pay TV subscriptions at large public cable and satellite operators experienced a further decline of 10.4% year-over-year, according to Nollen.

Nollen also mentioned the impact of direct-to-consumer platforms, stating that it "helps to a point," but there is "much more news to come."

The recent financial results for Disney's second quarter of 2024 showed positive performance. The company reported earnings per share (EPS) of $1.21, exceeding the Zacks Consensus Estimate of $1.12 and representing a 30.1% increase compared to the first quarter of 2023. Revenue for the quarter reached $22.08 billion, slightly missing the Zacks Consensus Estimate by 0.23%, but surpassing the previous year's first-quarter revenue by 1.2%. Disney also repurchased $1 billion in stock and declared a dividend of $0.45, which reflects a 50% increase compared to the previous quarter.

Looking ahead, Disney's management provided guidance for fiscal year 2024, including a projected 25% growth in EPS, up from the previous guidance of 20%. The company expects to achieve free cash flow of $8 billion, maintain its annualized cost target, and repurchase $3 billion in stock by the end of the year.

CEO Bob Iger expressed satisfaction with the company's performance in the second quarter, highlighting the strong growth in the Experiences segment and the profitability of the streaming business. He emphasized the positive results from the turnaround and growth initiatives implemented in the previous year and mentioned upcoming theatrical releases, successful television shows, and the evolution of ESPN as a digital sports platform.

In addition to the rating update on Disney, Macquarie analyst Tim Nollen also made changes to other stocks in their portfolio. Nollen lowered the price target on Comcast Corp by 7% to $40 and maintained a Hold rating. Conversely, Nollen raised the price target on Fox Corp by 6.7% to $32 and also maintained a Hold rating.

According to data from WallStreetZen, 100% of top-rated analysts currently rate Disney as a Strong Buy or Buy, with no analysts recommending a Hold or selling the stock. The consensus forecast among analysts is that Disney's earnings per share for the upcoming year will be $1.75, representing an 87.9% increase on a year-over-year basis.

Since the release of Disney's latest quarterly report on May 7, 2024, the stock has experienced a modest increase of 0.4%. However, when comparing the stock's performance to the S&P 500 index year-over-year, Disney has trailed behind, with a 14% increase compared to the index's 26.2% growth.

Macquarie analyst Tim Nollen, who provided the updated price target and rating for Disney, is ranked in the bottom 6% out of 4,581 Wall Street analysts by WallStreetZen. Nollen has an average return of -16% and a win rate of 28.2%. Their specialization lies in the Technology, Communication Services, and Consumer Cyclical sectors.

The Walt Disney Company, founded in 1923 and headquartered in Burbank, CA, is a prominent mass media and entertainment conglomerate. Disney's diverse portfolio includes its renowned film studio, Walt Disney Studios, as well as the ABC broadcast network, cable television networks, publishing, merchandising, music, and theater divisions. The company has also entered the direct-to-consumer streaming market with platforms such as Disney+, Star+, ESPN+, and Hulu.

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