Disney share price forecast and Q1 earnings preview

[MongiIG]

The Walt Disney Co. share price looks to have reversed its downtrend ahead of its Q1 results release

Source Bloomberg

 

Shares The Walt Disney Company Bob Iger Bob Chapek ESPN+ Hulu

 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Friday 03 February 2023 

When is Disney’s Q1 earnings date?

The Walt Disney Co., listed on the New York Stock Exchange (NYSE), is the largest media and broadcasting company in the world. The company is set to report its fiscal first quarter earnings for 2023 (Q1 2023) on Wednesday the 8th of February after US markets close.

The Walt Disney Co. Q1 2023 earnings: What ‘the street’ expects from results?

The upcoming results will mark the first quarter with Bob Iger back at the helm. Bob Iger had previously served as CEO of the group from 2005 to 2020. His return in the last fiscal quarter follows the immediate dismissal of his successor Bob Chapek and was upon the request of the Disney board.

Box office sales are expected to support revenue growth for the group with the latest Avatar movie having grossed over $2bn. Subscription numbers for Disney+, Hulu and ESPN+ will again be in focus, determining the success of new packaged bundle offerings which amalgamate these services. The groups parks and recreation services had a phenomenal return to growth in 2022 (post lockdowns), and markets will be looking to see whether this momentum has been continued with higher ticket prices to support. Markets will also look to see the health of linear network television for the group, and hear further about restructuring initiatives pertaining.

How to trade the Walt Disney Co. results?

Refinitiv data on the Walt Disney Co. arrives at the following consensus estimates for the Q1 2023 results:

• Revenue of $23.359 for the quarter (+7% year on year)
• Earnings per share $0.79 (-25% year on year)

Source Refinitiv

A Refinitiv poll of 30 analysts maintain a long-term average rating of buy for the Walt Disney Co. (as of the 3rd of February 2023, with 7 of these analysts recommending a strong buy, 17 recommending a buy, 6 hold and 0 sell or strong sell recommendations on the stock.

Source IG

From a retail trader perspective (as of 3rd of February 2023), 97% of IG clients with open positions on the Walt Disney Co. expect the price to rise over the near term, while 3% of IG Clients with open positions expect the price to fall.

Disney earnings: technical analysis

 

Source IG

The share price of Disney has recently broken above the 200-day simple moving average (200MA) (blue line). This suggests that the longer-term trend is no longer down. The 20MA (red line) has also recently crossed above the 50MA (green line) suggesting that the short to medium term trend is now up.

The stochastic does however provide a conflicting signal as it trades in overbought territory.

Our preference is to look for long entry on the stock into a pullback from overbought territory, with a longer-term upside resistance target of 126.35. However, should a pullback instead take the share price below resistance and the 200MA at around 101.30, our upward trend bias assumptions would need to be reassessed.

In summary

• Q1 2023 results are expected to be released on the 8th of February after US markets close
• While revenue is likely to have increased against the prior year’s comparative period, earnings are expected to have declined
• Consensus broker rating suggest the Walt Disney Co. to be a long term buy
• Most IG clients with open positions expect the share price to rise in the near term
• The price trend for Disney appears up although overbought at current levels