[Overseas Stocks Spotlight] "Walt Disney, Expected Revenue Growth from OTT Subscriber Increase and Theme Park Reopening"

[Asia Economy Reporter Eunmo Koo] Walt Disney (Walt Disney·DIS.US) reported better-than-expected results despite continued weakness in its theme parks, thanks to the strong growth of Disney+. With an increase in Disney+ subscribers in the US and overseas, and expected revenue growth from the normalization of theme park operations, the company is considered relatively attractive within the industry.

Walt Disney's revenue for the fourth quarter of fiscal year 2020 was $14.7 billion, down 23.1% compared to the same period last year, and adjusted earnings per share (EPS) turned to a loss of $-0.20, surpassing the consensus of $14.2 billion and $-0.71. On the 15th, Bo-won Choi, a researcher at Hanwha Investment & Securities, explained in a report, "In the fourth quarter, the impact of COVID-19 continued, causing theme park revenue to decrease by 61% year-over-year. However, Disney+ and ESPN+ subscribers increased by 28% and 21% respectively from the previous quarter, reaching 73.7 million and 10.3 million, leading to a 42% growth in revenue in the D2C & International segment."

Walt Disney did not provide revenue and EPS guidance for 2021 but announced plans to execute investments delayed this year in the next year. Capital expenditures (CAPEX) in 2021 are expected to increase by $550 million compared to this year ($4 billion).

There is an expectation of revenue growth driven by an increase in over-the-top (OTT) video service subscribers and the reopening of theme parks. Researcher Choi analyzed, "In the US, Disney+ and ESPN+ subscribers are increasing faster than expected, and Disney+ is scheduled to launch in Latin America in November. Since there are plans to expand the countries offering Disney+ services next year, revenue growth in the D2C & International segment is anticipated."

Furthermore, with the development of vaccines reducing the risk of COVID-19, additional revenue growth from the normalization of theme park operations is expected. Researcher Choi forecasted, "Walt Disney's 12-month forward price-to-earnings ratio (PER) is 47.8 times, which is at the industry average level, but the stock price has yet to recover to the level at the beginning of the year. The upward revision of next year's revenue and earnings consensus could also act as a factor for further stock price increases."

This content was produced with the assistance of AI translation services.