Investing.com -- Walt Disney 's (NYSE:DIS) drive to bring down costs will help underpin strong profit growth at the entertainment giant in its 2024 fiscal year, according to analysts at Needham.
Disney reported adjusted profit per share of $1.22 in the three months ended on Dec. 30, above Wall Street estimates of $1.00, as well as a $3 billion share buyback and a 50% uptick in its quarterly dividend. The firm emphasized that it had registered "significant" cost savings worth $500 million during the period.
Speaking in a call following the earnings, executives at the company noted that the business is "on track to meet or exceed $7.5 billion" in expense reductions across the company.
In a note to clients raising their rating of Disney to "Buy" from "Hold," the Needham analysts said the use of the word "exceed" implied that this target was "more likely now."
They added that a new streaming sports joint venture between Disney's ESPN unit and media groups Fox and Warner Bros. Discovery (NASDAQ:WBD) can lower churn -- or the amount of viewers who decide to cancel or not renew their subscriptions -- by 50%.
Core paid subscribers to Disney's streaming service, known as Disney+, fell 1% sequentially to 111.3M in the first quarter, although average revenue per user rose 2% to $6.84 thanks in part to subscription price hikes. Disney+ subscribers fell to 146.1 million, missing estimates of 151.1 million, due in part to a 24% decline at its Indian video-on-demand segment Hotstar.
However, Disney said it was still on pace to hit its target of achieving profitablity at the streaming business by this autumn.