A day after Disney disclosed its fiscal first quarter 2025 results - which included entertainment revenue rising year-over-year, Disney+ slightly declining as expected in subscribers and ESPN revenue also up - its stock dipped slightly even as five Wall Street analysts published relatively bullish post-earnings notes.In its Feb. 5 filing, the Burbank-based entertainment giant also lowered what it plans to spend on content this fiscal year. In November, the Bob Iger-led company said it expected to spend $24 billion, while in its latest disclosure it said the figure will be around $23 billion for produced and licensed content, including sports rights. For fiscal 2024, Disney’s content spend was $23.4 billion.The company’s stock was trading around $110 per share as of Thursday.“In terms of cost cutting, as a company, we’re focused constantly on identifying opportunities where we’re spending money perhaps less efficiently and looking for opportunities to do it more efficiently,” CFO Hugh Johnston told analysts on an earnings call when asked about the content spending revision.As of December 2024, Disney+ core subscribers stood at 124.6 million while Hulu sat at 53.6 million, a gain of about 10 million over the course of the year for Disney+ and about 4 million for Hulu in that time.“We actually are very pleased with where we are sub-wise for Disney+ and Hulu,” Iger said on the call, referencing a slight decline in Disney+ subscribers quarter-to-quarter. “As you know, we took prices up significantly fairly recently and expected the churn would be significantly greater, and it turned out we delivered numbers that were better than we had expected.”The Wall Street analysts’ research notes reflected measured takes on the fiscal quarter, with report titles like “Smooth Seas Ahead?,” “Checking the Right Boxes,” “Winter Soldier and “Cruising to start the year.”While “it is expected to be an investment year, we believe that there will be some discretion around the magnitude of spend, and the [Disney+] platform should benefit from a password-sharing crackdown, recent price increases and strong advertising,” a Bank of America team led by Jessica Reif Ehrlich wrote. The bank’s team has a “buy” rating as well as a $140 price target on Disney.Morgan Stanley‘s Benjamin Swinburne, meanwhile, raised his price target from $125 to $130 despite noting that the company will need to deliver on direct-to-consumer growth. “While Disney grew DTC subscribers overall in F1Q and Disney Plus losses were lower than expected, the guidance for a ‘modest’ decline in Disney Plus subscribers again in F2Q has raised investor concern,” the analyst wrote. “It has laid out its strategy to improve customer growth through product and technology investments, along with targeted content investments. This includes implementing paid sharing, improving recommendation engines and personalization, integrating ESPN flagship in August, among other initiatives. Ultimately, however, the market is expecting these initiatives to translate into higher net adds.”The attention paid on the earnings call on the direct-to-consumer front was focused on the launch of the flagship ESPN streaming service, which will arrive before the end of the year. Executives framed that sports streamer as a potential bundling opportunity with Disney+ and Hulu.“We continue to believe Disney will eventually settle into a more unified DTC vision and that the segment will mature into a meaningful money maker, but understand this will continue to be more of a show-me story,” wrote a MoffettNathanson team led by Robert Fishman in a post-earnings report. The analyst firm has Disney at a “buy” rating with a target price of $140.“Results set a strong start to the fiscal year,” wrote Guggenheim‘s Michael Morris, who has the company at a “buy” rating with a price target of $130. That target, his analyst team wrote, “reflects our confidence in the long-term strength and potential for Parks growth and the renewed focus on profitable growth at the company’s media and entertainment assets, offset by uncertainty toward consumer demand and the pace of the linear networks decline.”Revenue for content/sales and licensing rose compared to a year earlier, with Moana 2 and Mufasa: The Lion King in theaters vs prior year comps The Marvels and Wish. Yet “beneath the seemingly strong quarter … some lingering questions remain – ones that could set the tone for how the stock trades over the next couple of quarters,” wrote a Bernstein research team led by Laurent Yoon, which has an “outperform” rating and a $120 price target on the company.Yoon added in his Feb. 5 post-earnings take, “Should Disney focus on more aggressive subscriber growth or take a measured approach while expanding margins? Well, both. Balancing this equation is challenging, some may say impossible, but today’s lukewarm market reaction — despite a seemingly strong print-clearly indicates that investors are looking for both.”
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