Walt Disney Co should see its profitability improve in both fiscal 2024 and 2025, with its free cash flow (FCF) approaching pre-pandemic levels in fiscal 2024, according to UBS analysts.
In an update to clients, they maintained their ‘Buy’ rating and 12-month target price of $110 per share on the stock, noting that Disney should generate earnings per share (EPS) of $4.75 in fiscal 2024 and $6.14 in fiscal 2025.
"Management reaffirmed expectations for direct-to-consumer (DTC) profitability by year-end 2024 and the launch of ESPN DTC in fiscal 2025 - potentially with league and technology partners (partially confirming media reports it is talking with Apple, the NFL and NBA)," the analysts wrote.
They added that in its outlook for fiscal 2024, Disney management laid out four focus areas including DTC profitability, converting ESPN into a digital sports powerhouse, improved results in its Film division and more rapid growth in Parks.
And while analysts at UBS see Disney’s sports ad trends outperforming, they also anticipate similar Entertainment division DTC losses for its fiscal first quarter.
They also wrote that Earnings Before Interest and Taxes (EBIT) growth in fiscal 2024 would remain strong, led by international and cruises.
Shares of Walt Disney climbed 7% to $90.18 in late-day trading on Thursday.
Contact Sean at sean@proactiveinvestors.com