This analyst likes Disney stock after Thursday’s disappointing report

The Walt Disney Co. (NYSE: DIS) reported a 13% annualised decline in its second-quarter revenue that fell shy of estimates on Thursday, after the bell. The California-based company said it had 103.6 million paid subscribers on its streaming platform, Disney Plus, versus an even higher 109.3 million expected.

As per the quarterly financial report, earnings stood at 79 cents per share (56.04 pence) on an adjusted basis, compared to the analysts’ forecast of a lower 26 cents.

Alexia Quadrani’s remarks on CNBC’s “Worldwide Exchange”

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On CNBC’s “Worldwide Exchange”, analyst Alexia Quadrani of JPMorgan acknowledged the importance of Disney Plus for the mass media company but highlighted that “monthly gains in subscribers are going to be bumpy”. Quadrani, however, sees lots of reasons to be optimistic, especially as they’ve guided to one major content drop every week. She said:

“They’ve had phenomenal success in the previous quarter, and they’ve reiterated the guide. They have much better content drops longer term. It’s our top pick, and we’re very comfortable with our weight rating here.”

The Centre for Disease Control and Prevention lifted the requirement to wear masks for fully vaccinated people on Thursday. Commenting on the new guidelines, Quadrani said:

“Disney is always going to be conservative. They could have gone to 100% capacity at Disney World if they wanted to, according to the governor’s regulation, a long time ago. But they stayed conservative, around 35%. Now they’re a little higher than that. I think you’re going to see that capacity number rise pretty quickly now, with all the changes in CDC guidelines, with all the improvements we’re seeing on vaccinations. I think you’re going to see those losses at Disney World narrow very quickly.”

Disney’s earnings to double between 2021 and 2022

The JPMorgan analyst also highlighted that Disney’s earnings are expected to double between 2021 and 2022 on the back of parks and studios that are recovering dramatically. For 2023, she projected another 50% gain in earnings.   

Disney stock opened at $172.93 per share on Friday and is currently trading at $173.98 per share. The NYSE-listed company hit a year-to-date high of $201.91 per share in early March. Here’s what you need to know about stock market volatility.

In comparison, Disney had started the year at a per-share price of $177.68. At the time of writing, it has a market capitalisation of $315.82 billion.