Disney (DIS) Stock to Soar After Q4 Earnings and Amazon Partnership

November 8, 2019 13:55 UTC
  • Disney posted a strong fiscal fourth-quarter performance that topped analyst estimates.
  • The media titan also announced it struck a key partnership with Amazon for its Disney+ streaming service.
  • Analysts are busy buying call options and going long on DIS.

While Disney (NYSE:DIS) has been pulling back from the all-time high of $147.15, the company has been busy making money and building key relationships. On Thursday, the entertainment conglomerate announced a strong fiscal fourth-quarter.

The media giant reported earnings per share (EPS) of $1.07 to exceed analyst estimates of $0.95 EPS. In addition, Disney printed revenue of $19.1 billion, topping Wall Street expectations of $19.05 billion.

Bob Iger, Disney’s chief executive, said in a statement,

Our solid results in the fourth quarter reflect the ongoing strength of our brands and businesses.

Mati Greenspan, market analyst at eToro, sees that Disney’s diversity is one of the company’s strengths. When asked if the stock would rise due to a strong Q4 performance, he replied,

[It] could. They’re a large company and are involved in a lot of different businesses.

Leading Disney’s various business segments is the box office. Yahoo! reported that the Studio Entertainment segment revenue increased by 52% to $3.3 billion. On top of that, the company’s Media Networks segment surged 22% to the tune of $6.5 billion.

However, the Direct-to-Consumer and International segment, which includes Disney+, suffered operating losses of $740 million. That number is lower than estimates of $811.1 million.

The good news is that Disney’s distribution deal with Amazon can help narrow the losses of the Direct-to-Consumer and International segment.

Deal with Amazon: Fire TV to Carry Disney+

The media giant is busy finding opportunities to get a leg up in the crowded space of on-demand video streaming. Disney+ is set to launch in less than a week and a key partnership will help the new service hit the ground running.

CEO Bob Iger announced on Thursday that the company struck a distribution deal with Amazon. Amazon will carry the Disney+ streaming service on Fire TV devices.

CNBC confirmed the deal with Amazon. | Source: Twitter

The specifics of the deal involves Disney apps being available on Fire TV devices, which include Fire smart TVs and Fire Tablets. Users of Fire TV and Fire Tablet are eligible to a free seven-day trial of Disney+.

The deal will help the media giant take on the current market leader, Netflix. Fortunately for Disney, Netflix has been losing a lot of subscribers as of late. This opens a big opportunity for Disney+ to fill the void.

Analysts are Bullish on the Stock

With the fiscal fourth-quarter earnings beat and Amazon partnership, analysts are turning bullish on Disney. For instance, hedge fund manager and former Goldman Sachs analyst Will Meade sees a lot of bullish activity. According to Meade, $140 might be a quick target.

Will Meade expecting a quick 5% surge. | Source: Twitter

In addition, the widely-followed investor TJ sees Disney+ as a catalyst for a breakout. The investor is actually putting money in the company.

TJ expects next quarter to be huge thanks to Disney+. | Source: Twitter

Jon Najarian, CNBC’s Halftime Report anchor, is one of the big names that’s bullish on DIS. He put his money where his mouth is and he’s reaping the rewards.

Jon Najarian is a buyer of November call options. | Source: Twitter

Bob Iger has been busy expanding his Disney empire. Consequently, investors and analysts are responding. Many are now busy longing the stock. With the S&P 500 printing a fresh all-time high, it won’t be too surprising for DIS to do the same.

Disclaimer: The above should not be considered trading advice from CCN. The writer does not own Disney (DIS) stock.

This article was edited by Sam Bourgi.

Last modified: November 8, 2019 15:42 UTC

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Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Follow the author on Twitter @kirilnikk kirilnikk123@gmail.com