Walt Disney Co. (DIS) delivered a strong fiscal Q1 performance, prompting BofA Global Research to maintain its "Buy" rating and set a price objective of $140. The company's operating income exceeded expectations, growing 31% to $5.1 billion, while revenue increased by 5% to $24.7 billion, slightly below the $25.2 billion estimate. Adjusted EPS came in at $1.76, surpassing the forecast of $1.40, and Disney reaffirmed its FY25 outlook for high single-digit adjusted EPS growth.
Key drivers included robust performance in the Entertainment and Experiences segments, with Entertainment operating income at $1.70 billion and Experiences at $3.11 billion. The Sports segment also outperformed, with operating income reaching $247 million, driven by higher advertising rates and sub-licensing fees. However, management anticipates a modest decline in Disney+ subscribers in Q2 and challenges in the Sports segment due to college sports and NFL programming costs.
BofA highlights near-term catalysts such as profitability improvements in direct-to-consumer (DTC) operations, a reacceleration in the Parks business, and a strong film slate. "We maintain our Buy rating and $140 PO," BofA states, emphasizing the potential for growth across Disney's diverse business lines.
Disney's stock was trading at $112.11, down 1.05% on February 5.