The Walt Disney Co. (DIS), faced with mounting competition from new on-demand streaming platforms such as Netflix Inc. (NFLX) and Amazon.com Inc. (AMZN), has maintained its position at the helm of the movie-making world with another $1 billion hit film. One team of bulls on the Street contends that "much stronger-than-expected performance" of the Burbank, California-based company's new superhero film franchise "Black Panther" should help lift earnings per share (EPS) in 2018. (See also: Can Disney Spend its Way to Content Dominance?)
In a note to clients on Wednesday, analysts at J.P. Morgan increased their fiscal second-quarter EPS estimate for Disney from $1.57 to $1.68. JPM's Alexia Quadrani attributed her more upbeat forecast to the success of "Black Panther," which generated $1.3 billion in ticket sales since its debut on Feb. 16, compared to her previous forecast of $775 million.
"We believe the strength of Black Panther was largely unanticipated and therefore the company likely did not have adequate inventory to meet demand, limiting upside in the quarter" for Disney's consumer products business, wrote Quadrani.
DIS to Gain on 'Healthy' Growth in Adjusted EPS
JPM, which does not currently have a rating on the media giant's shares due to its position as a financial adviser for the firm, expects "healthy adjusted EPS growth in F2018E led by ongoing Parks strength across both domestic and international and a much more favorable studio slate that should help fuel healthier Consumer Products growth later this year."
The analyst is upbeat about Disney's upcoming films set to hit theaters over the next few months, including "Avengers: Infinity War" later in April, "Solo: A Star Wars Story" in May and "The Incredibles 2" in June.
DIS, closing down about 0.6% on Wednesday at $100.80 per share, reflects a 6.2% decline year-to-date (YTD) and a 10.9% loss over the most recent 12 months, underperforming the broader S&P 500's 1.2% fall and 12.3% gain over the same respective periods. Last year, the old-guard entertainment giant announced plans to pull content from Netflix as it prepares to launch its own direct-to-consumer streaming platform by 2019. (See also: Amazon’s $1B 'LoTR': Most Expensive TV Show Ever.)