Disney is back. After several quarters of cutting costs and revamping its streaming business, CEO Robert Iger’s turnaround plans is paying off: On Thursday, the entertainment giant reported strong quarterly earnings and a robust outlook for the coming year. Revenue in the fiscal fourth quarter totaled $22.57 billion, topping the $22.45 billion expected by analysts, according to estimates compiled by LSEG. Adjusted earnings per share (EPS) jumped 39% year over year to $1.14, outpacing the $1.10 estimate, LSEG data showed. Shares of Disney popped 10% on the results. Bottom line It was a great quarter. Sales and earnings beat. The company generated strong cash flow. And perhaps most importantly for investors, its direct-to-consumer streaming unit’s profitability was well ahead of the consensus estimate. And the good run should continue, with management forecasting earnings growth acceleration over the next couple of years. The team rarely looks that far out in its reports. Helping to deliver that outcome is all the work the team has done to create additional ways to make money on its content. As Iger noted on the earnings conference call, “a successful Disney movie today drives more value than it ever has in the past,” with an increased number of consumer touch points including streaming, parks and resorts, cruise ships, consumer products, and games. “This multiplier effect means that the system economics of our movie business has never been stronger,” he added. Disney also announced a strong slate of releases set for 2025, including “Captain America: Brave New World,” “Lilo and Stitch,” “The Fantastic Four: First Steps,” “Zootopia 2” and “Avatar: Fire and Ash.” Management also shared that its ESPN DTC offering is expected to launch in the fall of 2024. This is the last major strategic move for Disney 2.0. On the call, the team was clearly excited about this launch, noting it will include the basic ESPN services, which is coverage of live sports and studio shows and commentary, along with fully integrated betting. “But I think one of the things that is, um, hasn’t been appreciated yet is that when you apply technology to the presentation of sports, almost anything is possible. So imagine an AI driven, personalized sports center as a feature for instance,” Iger said. Given the results and management’s rosy outlook, it’s clear that the worst is behind us. Looking ahead, there are plenty of reasons for optimism: A strong content lineup set for 2025 ESPN DTC streaming coming to market next fall Multiple expansion projects in the works at Disney’s theme parks Several new Disney cruise ships Our verdict: Disney shares have plenty of upside potential, and we reiterate our 1 rating and $130 price target. DIS YTD mountain Disney Year to Date Guidance Management provided its initial outlook for 2025: Earnings growth in the high single digit percentage for the full year versus 2024. That appears to exceed Wall Street’s expectations for growth earnings…
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