Disney Surges Thanks to Winning Earnings

Shares of Disney (NYSE:DIS) gained in after-hours trading after the company reported earnings for its first quarter of Fiscal Year 2023. Earnings per share came in at $0.99, which beat analysts’ consensus estimate of $0.78 per share.

Sales increased by 7.7% year-over-year, with revenue hitting $23.51 billion. This beat analysts’ expectations of $23.28 billion.

Domestic Disney+ subscribers saw their contribution to average monthly revenue drop from $6.10 per month to $5.95. Reports noted this was due mainly to subscribers going for multi-product offerings. A shift in retail pricing also contributed, though to a smaller extent. More importantly, the company cut its losses on the service to $1.1B from $1.5B in the fourth quarter.

For the first time since its launch, the Disney+ streaming service lost subscribers after a decline of 1% from the prior quarter. The total at the end of the first quarter stood at 161.8M.

Disney’s CEO Bob Iger commented: “After a solid first quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises.”

Iger offered some plans on how to reach such a goal. The company would reorganize around three business units. The first, Disney Entertainment, will be run by Alan Bergman and Dana Walden. The second, ESPN, will continue under Jimmy Pitaro’s auspices. ESPN was formerly under Disney Entertainment’s control. Finally, Disney Parks, Experiences and Products will remain under Josh D’Amaro’s banner.

Additionally, Disney will push for substantial cost savings efficiency, targeting a $5.5 billion total cost savings package. The cost savings will include the loss of 7,000 jobs.

Overall, Wall Street has a consensus price target of $119.79 on Disney, implying 7.19% upside potential, as indicated by the graphic above.

Disclosure