Bank of America has reiterated its ‘buy’ rating on Walt Disney Co (NYSE:DIS, ETR:WDP) shares following the entertainment conglomerate’s fourth-quarter results.
Adjusted earnings per share of $1.14 exceeded BoA’s forecasts, as did the company’s guidance for the year ahead.
Near-term catalysts, according to BoA, include a “profitability inflection” in Disney’s direct-to-consumer entertainment platforms.
This will be supported by “an increase in advertising revenue due to higher impressions at Disney+ and Hulu partially offset by lower rates”.
BoA also sees a “reacceleration” in Disney’s theme parks business.
Disney’s sports segment, which includes ESPN, was a slight letdown in the fourth quarter, noted Boa.
“Operating results were driven by lower affiliate revenue due to fewer subscribers, partially offset by higher rates, advertising revenue growth and higher programming and production costs,” said BoA analysts of the sports segment.
On the cruise ship front, BoA sees a positive catalyst with Disney launching its sixth ship, called ‘Disney Treasure’, while another seven ships are in the pipeline.
Disney shares jumped nearly 7% to $109.81 following publication of the results. Year to date, they are up more than 20%.