Source: PaxForex Premium Analytics Portal, Fundamental Insight
In 2023, Walt Disney is dominating the box office once again with the release of Guardians of the Galaxy Vol 3. Despite falling short of its predecessor's $146 million opening, the film still raked in an impressive $114 million in ticket sales during its debut weekend. Thanks to an unexpectedly strong international performance, the movie's worldwide box office earnings reached a whopping $282 million. This success adds to Disney's already impressive record of producing four out of the five highest-grossing films in the US since November, by the time the film finishes its run.
Disney's stock has outperformed the market this year, rising 16% compared to the market's return of nearly 8%. Although it is currently trading at less than half of its early 2021 peak, momentum appears to be in its favor.
The media conglomerate's financial results for the fiscal second quarter will be released this week, providing the company with its next significant challenge. Market expectations for the report, which will be published shortly after the market closes on Wednesday afternoon, are worth examining.
When Disney releases its latest financial results this week, analysts are expecting a mixed bag. The company is projected to show a 7.5% increase in revenue to $21.8 billion for the first quarter of the year. While this would be the weakest year-over-year growth in two years, it is not considered a major concern.
Disney's theme parks are expected to see strong double-digit growth due to high attendance and increased pricing to offset rising costs. The direct-to-consumer streaming business is also likely to show healthy growth, though there are concerns about the operating loss, which has exceeded $1 billion for two consecutive quarters. CEO Bob Iger is under pressure to address this issue.
Disney's movie studio is expected to perform better than it did last year, but the traditional media business could still negatively impact the company's overall performance. As viewership of traditional networks declines and the TV advertising market remains sluggish, the legacy media business may continue to be a drag on Disney's financial results.
Analysts are predicting earnings of $0.93 per share, which would represent a 14% decline. However, in his first report since returning as CEO in November, Bob Iger surpassed expectations. The question is whether he can achieve a similar result in his first full quarter in charge.
In an effort to turn Disney+ profitable by the end of fiscal 2024, CEO Bob Iger plans to cut $5.5 billion in annual costs over the next two years, with $3 billion in cuts coming from content. The restructuring has already begun, including layoffs, but the bottom-line improvement may not be noticeable until later this fiscal year or even next year. Despite this, Disney stock has outperformed the market in 2023, a trend not seen in the previous two years. A strong financial report could help maintain this lead, even if the initial numbers are not particularly impressive.
As long as the price is above 96.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 102.70
- Take Profit 1: 108.00
- Take Profit 2: 113.00
Alternative scenario:
If the 96.00 level is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 96.00
- Take Profit 1: 93.00
- Take Profit 2: 90.00
