Walt Disney Co (NYSE: DIS) is poised to benefit from an uptick in amusement park attendance in the fiscal second quarter, with initial indicators suggesting robust travel to the state of Florida, according to (BofA) Securities.
The Walt Disney Thesis: Apart from park reopening, the company plans to increase investments in direct to consumer (DTC) with the rollout of Star internationally, Reif Ehrlich said in the note.
“Content sales will likely be weak given continued delays in theatrical releases (although this will soon pick up) which has also hurt home entertainment,” she added.
“FY2Q results are unlikely to be a catalyst, however commentary on theme park reopenings, pent up consumer demand and capacity, as well as initial signs of traction on the international rollout of Star, movies, television, and advertising should be significant catalysts,” the analyst wrote.
Reif Ehrlich mentioned five key drivers of Walt Disney’s performance in the quarter:
- 1.5% growth in affiliates.
- 10% decline in advertising sales due to tougher comps and lower ratings.
- Gradual increases in capacity in theme parks “with the potential of further reopenings with increased vaccination rates and relaxed regulations.”
- Favorable DTC trends with Star’s international launch.
- Continued softness within Studio with no major film releases in the quarter, although there are prospects of several new releases in the back half of the fiscal year.
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