Walt Disney Company (NYSE: NYSE:DIS) shares fell close to 7% in after-hours trading on Tuesday after the entertainment giant reported below-consensus fiscal year fourth-quarter results and issued lackluster guidance.
The Disney Analyst: KeyBanc Capital Markets analyst Brandon Nispel maintained an Overweight rating on Disney shares and reduced the price target from $143 to $119.
The Disney Thesis: Disney’s fourth-quarter results missed across the board and the fiscal year 2023 revenue and operating income guidance of high-single-digit growth for both trailed expectations of 12% and 20% growth, respectively.
The analyst said it’s “not the time to panic and sell” to those investors who have held onto Disney’s shares over the past year, which has been brutal.
Giving the rationale for the deduction, the analyst noted that Disney’s linear business should outperform most peers through the cycle and that direct-to-consumer losses have peaked. The analyst expects a sequential improvement in the first half of 2023, with the fiscal year 2024 guidance calling for profits.
Additionally, Disney holds the key to Parks, which remains a “key differentiator and resistant, and not immune, to the macro downturn, he added.
“From our vantage, should DTC continue to improve, DIS DMED segment profitability will be impressive vs. peers, and Parks should continue to trend higher as macro conditions normalize, which should set DIS up for accelerating growth in FY24,” Nispel said.
Price Action: Disney shares closed Tuesday’s session down 0.53% to $99.90 and shed 6.82% in after-hours to $93.09, according to Benzinga Pro data.
Read Next: How To Buy Disney (DIS) Stock
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.