Walt Disney (DIS) stock is down Wednesday even though the entertainment and media company beat top- and bottom-line expectations for its fiscal 2025 first quarter and reiterated its full-year outlook.
In the quarter ending December 28, Disney's revenue increased 4.8% year over year to $24.7 billion, led by 8.9% growth in its Entertainment segment to $10.9 billion. Earnings per share (EPS) rose 44.3% from the year-ago period to $1.76.
"Our results this quarter demonstrate Disney's creative and financial strength as we advanced the strategic initiatives set in motion over the past two years," said CEO Bob Iger in a statement.
Iger cited "outstanding box office performance" during the quarter, including the top three movies of 2024, and improved profitability of Disney's Entertainment direct-to-consumer (DTC) streaming businesses.
Indeed, it's the first time Disney has reported a first-quarter profit for its direct-to-consumer segment. And fewer subscribers left than anticipated following a price increase in October.
The CEO also noted "an important step to advance ESPN's digital strategy by adding an ESPN tile on Disney+" and strategic investments in the "enduring appeal" of Disney's Experiences segment.
The results topped analysts' expectations. Wall Street was anticipating revenue of $24.6 billion and earnings of $1.45 per share, according to CNBC.
Disney ended the first quarter with 124.6 million Disney+ subscribers, down from 125.3 million at the end of the fourth quarter, and 53.6 million Hulu subscribers, up from 52 million.
Disney's reiterated outlook for 2025 calls for high-single digit EPS growth compared to 2024.
"Overall, this quarter proved to be a strong start to the fiscal year," Iger added, "and we remain confident in our strategy for continued growth."
Is Disney stock a buy, sell or hold?
Disney stock continues to recover after a rough patch during the middle of 2024 and has outperformed the S&P 500 with a 27% gain vs 14% for the index over the trailing six months. And Wall Street is bullish on the Dow Jones stock.
According to S&P Global Market Intelligence, the average analyst target price for DIS stock is $124.56, representing implied upside of more than 10% to current levels. And the consensus recommendation is a Buy.
Financial services firm BofA Securities is one of the most bullish outfits on the blue chip stock with a Buy rating and $140 price target.
"DIS reported a solid fiscal first quarter with operating income coming in above our expectations while revenue was modestly below," writes BofA Securities analyst Jessica Reif Ehrlich in a note this morning.
According to Ehrlich, near-term catalysts for Disney include a profitability inflection in DTC and a reacceleration in the Parks business as well as a strong film slate that drives growth across DTC, Parks and Consumer Products.
