On Wednesday, Guggenheim reiterated its Buy rating on Walt Disney shares (NYSE:DIS), maintaining a price target of $140.00. The firm adjusted its outlook for Disney's Experiences segment, citing a more conservative demand forecast. Growth in Experiences revenue is now projected at 6.2% for the fiscal third quarter, down from the previous estimate of 8.2%. This figure is expected to slightly increase to 6.7% in the fiscal fourth quarter, compared to the former 7.6% projection.
The forecast for Disney's adjusted segment operating income (OI), excluding one-time items, aligns with the company's guidance of mid-to-high-single-digit growth for the fiscal third quarter. However, the fiscal fourth quarter Experiences adjusted segment OI growth is anticipated to be 9.0%, which is slightly below management's prior expectation of double-digit growth. This revision is based on updated analysis of the Parks data.
Guggenheim has also increased its theatrical forecasts due to the strong performance of "Inside Out 2" and adjusted its direct-to-consumer (DTC) estimates to account for higher costs associated with Hotstar cricket rights. Consequently, the firm's projection for Disney's total company revenue in the fiscal third quarter is now slightly reduced to $23.2 billion, down from the prior estimate of $23.4 billion. Despite this adjustment, the segment operating income is expected to remain steady at $3.8 billion.
The firm's decision to maintain the Buy rating and $140 price target reflects its ongoing confidence in Walt Disney's stock performance, despite the modest adjustments to revenue and operating income projections for the upcoming quarters.
In other recent news, activist investors have initiated a record number of campaigns against global companies in the first half of 2024, according to Barclays (LON:BARC). Notable activists targeting companies include Elliott Investment Management, Starboard Value, and Jana Partners. However, their success rate in boardroom battles has declined, with activists securing fewer board seats compared to the previous year.
In developments related to Walt Disney Company (NYSE:DIS), Goldman Sachs (NYSE:GS) has assigned a Buy rating and set a price target of $125.00, citing potential for robust earnings growth. The firm also highlighted Disney's world-class storytelling and strong portfolio of sports rights as key growth drivers.
Meanwhile, Trian Fund Management has sold its entire stake in Disney following a contentious boardroom struggle. Disney is also seeking antitrust approval from India's Competition Commission (CCI) for a proposed $8.5 billion media merger with Reliance Industries, which could create the largest entertainment entity in India.
Lastly, Texas's 25th congressional district representative, Roger Williams, has conducted multiple stock transactions involving various companies, including Disney, through his Edward Jones Brokerage Accounts.
InvestingPro Insights
As Walt Disney (NYSE:DIS) navigates through the fiscal year, real-time data and expert analysis from InvestingPro offer valuable insights into the company's financial health. With a market capitalization of $178.64 billion and a high earnings multiple, as indicated by a P/E ratio of 105.12, Disney's position as a prominent player in the entertainment industry is evident. Looking at the last twelve months as of Q2 2024, Disney's revenue stood at $89.2 billion, reflecting a modest growth of 2.55%. The company's gross profit margin during this period was healthy at 35.03%, contributing to an operating income of $10.91 billion.
InvestingPro Tips suggest that net income for Disney is expected to grow this year, a sign of potential upside for investors. Moreover, analysts predict the company will be profitable this year, which is confirmed by its profitability over the past twelve months. These factors may reassure investors, especially in light of the recent adjustments to Disney's revenue and operating income projections. For those looking to delve deeper into Disney's financial metrics and gain additional insights, there are six more InvestingPro Tips available. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription and explore the full range of expert analysis.
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