Walt Disney Co. shares got a reaffirmed Hold rating from Needham analyst Laura Martin.
For 4Q22, Martin maintained the revenue estimate at $21.2 billion (representing a y/y growth of 14% ). However, she lowered her forecast for the operating income by 29% to $1.9 billion.
Martin’s guidance reflects Content Sales Licensing & Other OI estimate of $100 million below 4Q21 levels (a loss of $65 million) and larger than expected costs from DIS continuing to scale back on 3rd party content licensing. The forecasts also incorporate higher DTC losses ($1.35 billion vs. $800 million before) relating to costs associated with selling less owned content to outside 3rd parties and higher than expected content expenditures, and a higher tax rate.
Martin’s estimate for Operating EPS for 4Q22 is down by 45% to $0.35.
For the longer-term, the analyst think that Disney has a balance capable of weathering a longer COVID-related earnings downdraft.
According to Martin, Disney will be a winner in the streaming competition in the long run.