Disney Earnings on Deck: Can Magic Kingdom Profits Keep the Stock’s Rally Alive?

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Walt Disney Co. is set to report fiscal third‑quarter results tomorrow morning, with investors watching closely to see if the company can sustain its recent momentum across parks, streaming, and sports. Expectations are high: analysts forecast rising revenue and profits, continued subscriber gains for Disney+, and robust demand in the Experiences division, which includes theme parks and cruises. With its stock up nearly 30% since the Q2 beat before cooling in recent weeks, Disney heads into the print facing both optimism and questions about valuation, tariff pressures, and execution on upcoming growth initiatives.

Consensus expectations call for revenue of about $23.75 billion and adjusted EPS of $1.45 to $1.48, both higher year‑over‑year. FactSet estimates put Disney+ subscribers at roughly 127.4 million, up from 126 million in Q2. Management previously guided for FY25 EPS of $5.75, a 16% jump from the prior year, and analysts expect tomorrow’s results to reaffirm that trajectory. UBS sees EPS of $1.59 for the quarter and segment operating income of $4.75 billion, up 12% YoY, while Jefferies and Citi both recently raised price targets, citing strong parks demand and improving streaming profitability.

The Experiences segment will once again be a focal point. FactSet estimates call for $8.89 billion in Q3 revenue and $2.46 billion in operating income. Domestically, Walt Disney World and Disneyland continue to benefit from new attractions and steady guest spending, with per‑capita spending up 4% in Q2. Cruise operations are another bright spot, with new ships entering service later this year expected to boost FY26 revenue by more than $1 billion, according to Jefferies. Internationally, parks like Hong Kong Disneyland and Shanghai Disney Resort are seeing slower growth as post‑COVID normalization continues, which remains a watchpoint.

Streaming and direct‑to‑consumer profitability are equally critical. Disney+ Core ARPU rose 3% in Q2 to $7.77, fueling a sharp jump in operating income for the Entertainment segment, which hit $336 million versus just $47 million a year earlier. For Q3, Disney is expected to add 1–2 million net subscribers and keep profitability on an upward track, aided by price increases and tighter cost controls. Analysts are also watching progress on Disney’s bundling strategy with Hulu and the anticipated launch of ESPN’s flagship direct‑to‑consumer product later this year, a move widely seen as transformative for the Sports segment.

In Sports, all eyes will be on ESPN. Management has guided for segment operating income growth in FY25, and the planned ESPN streamer in Q4 is expected to be a key catalyst. The Athletic recently reported that the NFL will provide ESPN with significant media assets in exchange for equity, signaling a deepening of the league’s integration with Disney’s sports arm. Analysts view this as an important step in maintaining ESPN’s dominance as linear TV continues to decline.

Q2’s performance set a high bar. Revenue reached $23.5 billion, with Entertainment revenue up 9% year‑on‑year to $10.17 billion and operating income surging 61% to $1.3 billion. Theatrical releases like Inside Out 2 and Deadpool and Wolverine drove strong results, and while The Fantastic Four: First Steps will mainly impact Q4, Disney’s pipeline remains strong with Tron: Ares, Zootopia 2, and Avatar: Fire and Ash all slated for release. Content sales and licensing revenue jumped 54% to $2.15 billion, underlining the leverage from recent box office success.

Disney’s Q2 also saw major strategic announcements, including the planned Disneyland Abu Dhabi in partnership with the Miral Group, aimed at capturing demand from the Middle East, Africa, and Asia. CEO Bob Iger highlighted record returns on capital from domestic park investments and a commitment of $30 billion to expand offerings in Florida and California. CFO Hugh Johnston lifted full‑year EPS guidance to $5.75 and emphasized long‑term double‑digit growth into FY26 and FY27.

Risks remain on the table. Analysts are monitoring tariff and macroeconomic headwinds that could weigh on park spending and guest volumes, particularly in international markets. The streaming business, while improving, faces continued competitive pressures and questions about subscriber churn. And valuation is no longer cheap: Disney’s stock has rallied strongly since Q2, leaving less margin for error if Q3 guidance disappoints.

Still, sentiment remains broadly bullish. UBS, Citi, and Jefferies all maintain Buy ratings, with price targets in the $138–$144 range, implying double‑digit upside. Analysts emphasize the combination of resilient domestic parks, new cruise capacity, improving direct‑to‑consumer margins, and ESPN’s digital pivot as a powerful growth mix.

Bottom line: Disney enters Q3 earnings with momentum across parks, streaming, and sports, backed by strong box office results and strategic expansion plans. If the company delivers on subscriber growth, margins, and Experiences strength, the stock’s rally could continue into year‑end, though tariff risks and competitive streaming dynamics mean execution will be key.