It’s been an eventful few months for Walt Disney Co (NYSE: DIS), and investors will be watching for much more than earnings and revenue numbers when the company reports fiscal third-quarter earnings on Aug. 7.
Now that Disney’s buyout of Twenty-First Century Fox ( FOXA) is nearly complete, analysts are optimistic about the next era of Disney entertainment.
[See: 7 of the Best Stocks to Buy for 2018.]
Wall Street analysts are expecting Disney to report third-quarter earnings per share of $1.95. They are also expecting revenue of $15.34 billion on the quarter, representing 7.7 percent year-over-year growth.
Investors will be paying particularly close attention to revenue growth in Disney’s struggling Media Network segment. Last quarter, Disney reported a 6 percent decline in Media Network revenue and a 3 percent decline in network subscriber count as cord-cutters continue to migrate away from traditional cable TV packages.
Investors will also be anticipating commentary and/or data from the first full quarter since the launch of Disney’s streaming sports service ESPN+. The success or failure of ESPN+ could be a telling predictor of the difficulty that awaits Disney when it launches its TV and movie streaming service next year.
Analysts will also be keeping an eye on Disney’s costs given the pricey content deals and ballooning budgets of other media companies in recent months. Disney has also said it will be taking a $180 million hit due to streaming service investments this year.
Finally, Disney investors are eagerly anticipating updates on the $71 billion Fox deal, which was officially approved by Disney shareholders in late July. The deal won’t be complete until Disney gains global regulatory approval.
Bank of America analyst Jessica Reif has high hopes for Disney’s longer-term streaming future but is predicting slight EPS and revenue misses in the third quarter.
“We project DIS’ [earnings] will reflect healthy Studio and Theme Park trends, partially offset by an unfavorable Easter shift and ongoing streaming investments at Media Networks,” Reif says.
[See: 7 Low-Risk ETFs to Protect Your Portfolio.]
Bank of America is predicting third-quarter EPS of $1.84 on revenue of $15.29 billion for Disney.
“Despite well-telegraphed uncertainties surrounding the legacy TV industry, we believe DIS’s best-in-class [intellectual property] and execution position the company for continued growth as it scales up in content and enhances geographic diversification and more aggressively pursues streaming growth opportunities,” Reif says.
Bank of America has a “buy” rating and $144 price target for DIS stock.
More from U.S. News
8 of the Most Incredible Investments of the 21st Century
9 Stocks That Make Great Graduation Gifts
The Top 10 Investment Portfolio for Millennials
Walt Disney Co Earnings Preview: What To Expect From DIS Stock originally appeared on usnews.com
