Walt Disney Co (NYSE:DIS, ETR:WDP) is poised to deliver another quarter of strong earnings growth, with UBS analysts expecting to see resilient Parks performance and continued gains in direct-to-consumer (DTC) profitability.
The analysts reiterated their ‘Buy’ rating on the stock and raised their price target to $138 from $120 ahead of the report, representing upside of about 16% from the current share price.
“We expect fiscal third quarter results to highlight resilient demand at the Parks and similar improvement in DTC profitability, supporting a continuation of double-digit earnings growth,” they wrote.
The project Q3 earnings per share of $1.59, up 13% year-over-year, with full-year EPS reaching $5.89, representing 17% annual growth and outpacing the Street consensus of 16%.
Revenue is expected to be $23.3 billion, up 1% year-over-year, and segment operating income of $4.75 billion, a 12% jump from the year-ago quarter.
UBS expects solid growth in the Experiences segment, driven largely by domestic parks and new cruise capacity. Experiences revenue is projected to grow 4.8% year-over-year, including 6.9% growth in Domestic Parks revenue.
While international performance is expected to remain soft, UBS forecasts 15% year-over-year earnings before interest and taxes (EBIT) growth for Parks, contributing to 12% EBIT growth for the overall Experiences segment.
“For the year, we now expect 4.6% segment revenue and 8.1% EBIT growth, in line with guidance for the high-end of 6% to 8% outlook,” they added.
Streaming strength
UBS believes Disney’s streaming operations are emerging as the company’s most significant financial growth driver, on track to generate more than $1 billion in EBIT in fiscal 2025.
Disney+ is expected to have added 1.6 million subscribers during the quarter, and UBS projects segment EBIT of around $200 million, up from break-even a year ago.
With annual DTC revenue nearing $20 billion, excluding Hulu Live, the analysts highlighted significant margin expansion potential.
“We believe DTC remains the biggest source of upside to Disney's financials,” they wrote, noting the upcoming full integration of Hulu will offer further cost savings across technology, staffing, and branding.
While the Entertainment segment showed mixed results, UBS is more optimistic than earlier. “We now expect 3.9% year-over-year revenue growth (prior -5.5%) and $182 million of EBIT (prior $154 million),” they wrote, citing box office strength from Lilo & Stitch despite underwhelming performance from Elio.
Sports is expected to deliver flat to modestly down EBIT, but with solid advertising trends, UBS added. ESPN’s upcoming DTC launch remains a key strategic event, with affiliate revenue trends outperforming entertainment networks.
Meanwhile, Disney’s Linear Networks business continues to face challenges, with the analysts projecting a 4.5% year-over-year revenue decline and EBIT of $778 million, down from $966 million a year ago.
UBS remains bullish on Disney’s multi-year outlook, citing a combination of improving margins, content momentum, and strategic leverage of its assets.
“We remain constructive on the outlook for fiscal 2026 given underlying trends at the parks, new cruise capacity, strong content pipeline and inflecting margins in DTC with upside from full control of Hulu,” the analysts said.
They project EPS of $6.79 in fiscal 2026 and $8.00 in 2027, about 10% ahead of current Street expectations.
Disney will report its fiscal Q3 earnings before US markets open on Wednesday, August 6.