The surprise profit prompted at least one Wall Street analyst to lift his one-year price target on the stock.
Burbank, Calif.-based Disney reported adjusted earnings of 32 cents a share on revenue of $16.25 billion in the quarter ended Jan. 2. Analysts expected Disney to report an adjusted loss of 34 cents a share, according to FactSet.
Fueling the gains was revenue from its digital entertainment business, specifically Disney+, which registered nearly 95 million paid subscribers, more than tripling its total from a year ago when Disney+ first debuted.
Analysts were quick to zero in on the company's digital entertainment performance, which was largely viewed as a better-than-expected offset to steep year-on-year declines in Disney’s parks business, which has continued to suffer amid the pandemic and drop-off in travel and tourism.
Morgan Stanley analyst Benjamin Swinburne noted in a post-earnings note that even the parks business appears to have bounced back faster than expected and the company’s overall results “point way toward bull case for Disney,” even as subscription revenue came in slightly below the bank’s own estimates.
He has an overweight rating on the stock with a one-year price target of $200.
J.P. Morgan analyst Alexia Quadrani also pointed to positive growth from Disney’s streaming business, noting launches in new markets and “robust” future content drop should continue to propel revenue going forward. “The stock may take a break after a very strong run in recent months, but still stands out as top media pick for 2021,” Quadrani said.
She has an overweight rating on the shares.
KeyBanc analyst Brandon Nispel, meantime, noted that Disney’s streaming efforts are “scaling rapidly and growing faster than expected,” with a “long runway” for growth, while the parks segment shows “strong” efficiency, with a more profitable future ahead once attendance returns.
He raised his one-year price target to $225 from $182 and kept his overweight rating.
Shares of Disney were down 1.56% at $187.93 in trading on Friday.