Walt Disney Co. continues to present Macquarie analyst Tim Nollen new causes to fret.
The leisure large is within the midst of a cost-cutting push, however that may solely assist a lot, in accordance with Nollen. His listing of “concerning” income traits is rising, and he thinks these dynamics may weigh on Disney’s
DIS,
narrative going ahead.
Nollen downgraded Disney’s inventory to impartial from outperform again in May, citing a litany of issues, a few of which appeared to get on the core of Disney’s id. For instance, Nollen flagged that Disney may have a tough highway forward as soon as it inevitability tries to show ESPN right into a standalone streaming service.
See additionally: Why Disney’s ‘inevitable’ transfer to stand-alone ESPN streaming service would deliver ‘little risk, ample reward’
But there are additionally some near-term income traits which have him feeling nervous. Nollen had already anticipated a slowdown in parks development however has now highlighted a Wall Street Journal report indicating that Walt Disney World had one in every of its slowest July 4 weekends in nearly a decade.
The parks dynamic is “potentially worrisome” for the present quarter, Nollen wrote. While the July 4 interval gained’t have an effect on the outcomes Disney is because of report Aug. 9, “it may represent similarly softening trends before that,” he mentioned.
Additionally, he flagged weak box-office efficiency after “Elemental” struggled and the brand new “Indiana Jones” film logged solely a “modest” debut.
“Content production is now halted due to the WGA [writers’] and SAG-AFTRA [actors’] strikes, threatening production plans until resolved,” he wrote.
Disney additionally faces challenges in legacy media, as “extensive cord cutting” weighs on the corporate’s conventional pay-television enterprise.
See extra: 2.3 million Americans ditched pay TV providers within the first quarter
“Linear TV ad sales do not appear to be improving in the U.S. or internationally, and ABC saw one fewer NBA Finals game this year vs. last,” Nollen mentioned in his newest report.
Read: Disney’s Bob Iger says conventional TV is close to ‘obsolescence’ — and teases doable asset sale
The firm’s expense-reduction efforts may supply a cushion to income, in his view, “but these top-line issues are concerning.” The firm can be with out its longtime chief monetary officer, Christine McCarthy, who was “well-regarded” however introduced an surprising depart of absence in June.
“Perhaps this explains why CEO Bob Iger’s two-year term has now been extended through 2026, but it again raises questions about succession planning at Disney,” Nollen mentioned as he minimize his worth goal on Disney’s inventory to $94 from $103.
Opinion: Bob Iger’s repairs at Disney’s crumbling fort want extra time
Source web site: www.marketwatch.com
