This post was originally published on this site
Analysts noted that the DTC subscriber and linear TV outlooks keep deteriorating, while some positives (e.g. the Parks growth, cost cuts, and DTC ARPU growth) are already in consensus.
“In F’24E, we expect less advertising & affiliate revenue (-$500M) and less DTC w/ ~80% related to lower Disney+ subs). We see scope for additional cost cuts (integration of Hulu into Disney+, int’l DTC shutdowns, ESPN int’l sports rights & SG&A cuts), but high incr. margin DTC revenue growth is essential to DIS’s multiple and we are increasingly skeptical,” analysts said in a client note.
They cut the 2024 operating income forecast by 5% due to a slower and more gradual path to DTC profitability.
“After yesterday’s 8.7% tumble and with strong Parks and cost reduction trajectories, we expect valuation support. Today’s late cycle consumer environment and deteriorating DTC and linear revenue growth leave us more concerned about forecasting risk and time decay,” analysts concluded.
Disney shares fell yesterday after the company missed analyst targets for Disney+ Q1 subscribers.
Shares are up 0.2% in pre-market Friday.
