UBS sees continued pressure for Walt Disney (NYSE:DIS) in linear networks and mixed parks results, the firm's analysts stated in a note Monday.
"We expect F3Q to show continued pressure in advertising/linear OI, slightly higher DTC dilution and mixed Parks results," wrote the analysts, who have a Buy rating and a $122 price target on the stock.
UBS expects Disney's total revenues to grow 3.6% year-on-year to $22.3 billion compared to +7.6% in F2Q, while they see EBIT falling 12% year-on-year to $3.1 billion, "including higher depreciation from the close of the SW hotel (prior $3.5B), in line with trend, equating to 14.1% margins, down 250 bps yoy."
"The accelerated depreciation (and softening domestic Parks) makes it unlikely the company will hit its HSD OI guide for 2023 (UBSe +2%)," added the analysts. "We continue to expect DTC dilution to peak this year (UBSe $2.9B in F23 vs. $4B in F22, less than $1B in F24), driving improving EPS ($3.75 in F23, $5.25 in F24 vs. prior $3.99/$5.65)."
Disney shares are down over 8% in the last 12 months, currently trading above the $88 mark, down 0.4% Monday.