Walt Disney (DIS) shares moved higher Wednesday ahead of its first quarter earnings after the close of trading which are expected to highlight its direct-to-consumer push and any success its Disney+ streaming service has had taking subscribers from larger rival Netflix.
On a headline basis, Disney is expected to post December quarter earnings of 63 cents per share, nearly double last year's tally, on revenues of $20.9 billion.
Parks and Experiences sales are set to rise 77% to $6.4 billion as pandemic restrictions on attendance in major markets wane, while media and entertainment revenues are forecast to jump 14.5% to $14.5 billion.
"With the renewal with Comcast behind ESPN, attention has turned to the potential landing spot for the NFL’s Sunday Ticket package," said BMO Capital Markets analyst Daniel Salmon. "While the product could help differentiate Hulu/ESPN+, price could be considerable (other suitors reportedly include Apple AAPL and Amazon AMZN)and the market is likely to take a more skeptical view of incremental streaming investment than it would have 6-12 months ago."
Disney shares were marked 2.1% higher in late-morning trading Wednesday to change hands at $145.60 each, a move that still leaves the stock with a six-month decline of around 18%.
Investors are likely to be laser-focused, however, on subscriber additions to the group's Disney+ streaming service, which added only 2.1 million new users in the prior quarter and now sits some 50% shy of the company's 2024 goal of around 240 million total customers.
FactSet estimates suggest December quarter gains of around 8.5 million, powered by the release of new content such as the Beatles 'Get Back' documentary as well as the debut episode of 'The Book of Boba Fett'.
Disney's main streaming rival, Netflix (NFLX), added 8.28 million subscribers over its December quarter, but cautioned that new additions would slow to 2.5 million over the first three months of this year amid what it called a "Covid overhang" in key overseas markets and increased competition in the streaming market.
"We see Disney adding 5.8 million Disney+ net additions, which is slightly below consensus of 7 million, though we expect 2.3 million Hulu net additions vs. consensus of 1.5 million," said KeyBanc Capital Markets analyst Brandon Nispel, who carries an 'overweight' rating with a $216 price target on the stock.
"We would expect weakness for Disney+ to mainly be on International, and our Key First Look Data suggests strong Disney+ and Hulu retention despite recent price increases," he added.
Disney's first quarter results will also be the first under new board chairperson Susan Arnold, a Disney veteran who has served on the board since 2007 and replaced the outgoing Bog Iger on January 1.
"As I step into this new role as Chairman of the Board, I look forward to continuing to serve the long-term interests of Disney’s shareholders and working closely with CEO Bob Chapek as he builds upon the Company’s century-long legacy of creative excellence and innovation,” Arnold said in a statement on her appointment.
