Disney/LucasfilmJPMorgan slashed its earnings forecast for Disney and warned that further cuts could come in the future. The firm lowered its fourth-quarter earnings-per-share estimate to $0.95 from $1.05, citing increased spending ahead of Disney's streaming launch and the costly integration of Fox assets. The revision comes as Disney is preparing to release its direct-to-consumer streaming service on November 12. Watch Disney trade live.
JPMorgan slashed its earnings forecast for Disney and warned that further cuts may come in the future as the company rolls out its streaming platform.
The bank said it now expects Disney to generate $0.95 in earnings per share during the fourth quarter, down from a previous forecast of $1.05. JPMorgan also lowered its fiscal 2020 EPS estimate to $5.50 from $6.30.
The investment spending in Disney's direct to consumer platforms and the choppy integration of Fox's assets lead to more uncertainty in the financial outlook near term, JPMorgan said in a note to clients on Wednesday.
The firm continued: Estimate revisions will likely be frequent and sometimes notable over the next few quarters given so many moving pieces both internally and externally as this integration and media consumption evolution proceeds.
Disney is set to jump into the streaming world in early November with the launch of Disney Plus. Bullish analysts have argued that Disney's content catalogue including Marvel, Star Wars, and Pixar will give it a competitive advantage over incumbent competitors like Netflix and HBO.
Even JPMorgan remains bullish in the longer term. Despite its near-term concerns, the firm left its 12-month forecast unchanged, and reiterated its overweight rating.
More than two-thirds of the analysts covering Disney have a buy rating on the stock, according to data compiled by Bloomberg.
Shares of Disney are up more than 17% year-to-date.
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