Walt Disney falls as market worries over growth, but analysts remain positive (NYSE: DIS)

Walt Disney (NYSE: DIS) shares fell sharply on Thursday as the entertainment giant posted second-quarter results that were largely short of estimates, but several Wall Street firms maintained their positive stance, noting the company’s diverse earnings power.

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Bank of America analyst Jessica Reif Ehrlich, who rates Disney (DIS) shares buy, lowered her price target to $ 140 from $ 191, but noted that it has several near term catalysts, including continued improvement in its theme parks, the continued roll-out of its subscription services in different markets, along with increased content, as well as its upcoming film slate and the “future reinstatement of the dividend.”

Concerning Disney +, Reif Ehrlich noted that the addition of 7.9 million subscribers in the quarter was higher than forecast, but also noted management commentary that net adds could slow in the second-half of the year.

“In Parks, domestic theme parks continue to exhibit very strong results driven by healthy attendance and over 40% increases in per caps vs. 2019,” the analyst explained in the note.

Walt Disney (DIS) shares were down slightly more than 4% to $ 100.74 in premarket trading on Thursday.

Reif Ehrlich lowered her earnings per share estimate in 2022 to $ 3.04, down from $ 4.26, citing park closures in Asia, increased content spend on subscription services, as well as “headwinds in content licensing and a higher tax rate.”

Citi analyst Jason Bazinet, who has a buy rating on Disney (DIS) and a per-share price target of $ 200, noted that while quarterly revenue was 4% below Wall Street estimates, segment operating income was strong as were Disney + subscriber adds, which could be a boost to shares that have fallen more than 32% year-to-date.

Disney + now has 137.7 million subscribers, while ESPN + has 22.3 million, Hulu ended the quarter with 45.6 million and Hulu Plus Live TV added 4.1 million subscribers, bringing the total to 205 million company-wide.

On Disney’s (DIS) earnings call, Chief Executive Bob Chapek said that losses at its direct-to-consumer unit were likely to grow as it increases spending to the tune of $ 900 million more than the year-ago period.

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