Disney earnings preview: can a steadier mouse clear $120?

Walt Disney reports tomorrow morning with the stock grinding higher above its 200-day moving average and eyeing a breakout toward $120–$123 if the print cooperates. Investors are laser-focused on two things: sustained profitability and ARPU lift in streaming (Disney+, Hulu, ESPN+), and durable growth in Experiences (parks, resorts, cruise) as per-cap spending offsets choppy attendance. ESPN’s stand-alone streaming ramp and carriage frictions (the YouTube TV dispute) add headline risk, while succession chatter keeps a low hum in the background. Valuation sits below history and peers (roughly 16x P/E and 11x EV/EBITDA by some sell-side tallies), creating room for multiple expansion if guidance tightens and growth proves durable.

What the street expects. Consensus looks for EPS of about $1.03 (down ~9–10% year over year) on revenue near $22.9B (+~1% YoY). By segment, analysts peg Sports/ESPN revenue around $3.97B (+~2–3%), Experiences roughly $8.73B (+~6%), and Entertainment DTC near $6.30B (+~9%). On subscribers and mix, the Street models Disney+ Core at ~131M (Domestic ~59.4M; International ex-Hotstar ~71.3M), Hulu SVOD-only ~56.2M, Hulu Live+SVOD ~4.5M, and ESPN+ ~24.5M, with ARPU tailwinds from recent price increases: Disney+ Domestic ARPU ~$8.01 and International ex-Hotstar ~$7.73. Options imply ~±6% move; price action into the print has been constructive, but the bar on streaming profitability and Experiences margin is high.

Guidance and what would move the stock. Management has telegraphed double-digit EPS growth for FY26 as a base case; the buy-side will want either an explicit reaffirmation or enough bread crumbs (DTC margin expansion, Experiences operating income cadence, ESPN DTC uptake) to underwrite it. Any color that FY26–FY27 can deliver low-to-mid-teens EPS growth—as some bulls argue—would support a re-rating toward $140–$159 price targets cited by major houses. Conversely, softer commentary on churn (Antenna flagged elevated cancellations in September), per-cap spending, or ESPN monetization could push shares back to test the 200-day.

Key watch items and drivers • Streaming unit economics: The segment has turned profitable; investors need to see continued ARPU lift, lower churn from the unified Disney+ + Hulu app, and advertising momentum. Integration progress (Hulu becoming the global general entertainment tile) and any incremental cost takeout will be parsed. • ESPN direct-to-consumer: The August 21 launch is the linchpin. Early engagement, bundling with Disney+/Hulu, multiview/personalization features, and the impact of NFL rights (including the NFL Network asset exchange and equity stake structure) will shape FY26 revenue/OP expectations. • Linear trends and carriage: Updates on the YouTube TV blackout and any offsets via DTC funnel will matter for near-term guide; every week of blackout risk hits both subs and ad revenue. • Experiences margins vs. attendance: Third-party geolocation data suggest Disney attendance flat YoY into September with stronger per caps aided by pricing; investors will watch mix (domestic vs. international), cruise ramp (two new ships slip timing modestly), and hurricane lap effects as setup for FY26 acceleration. • Film slate and consumer products flywheel: Marvel’s relaunch beats, Zootopia 2, Avatar: Fire and Ash, and merchandise tie-ins drive downstream park and CP revenue; management’s comments on slate quality and cadence are almost as important as opening-weekend comps. • Capital allocation and succession: Clarity on FY26 cash priorities (content, parks capex, buybacks) and timetable/process for the CEO handoff can reduce the “governance discount.”

What the bulls are saying. Several shops (Wells, Morgan Stanley, BofA, Evercore) argue that Experiences plus DTC will comprise ~70% of earnings contribution by FY26, with sustainable per-cap growth and advertising/ARPU benefits as Hulu and Disney+ consolidate. They also see ESPN’s DTC launch and robust sports ad demand as additive. On valuation, they highlight the gap vs. market multiples despite improving earnings quality, with price targets clustered around $140–$159.

What the skeptics worry about. Bears flag tougher comps, competitive streaming dynamics (elevated churn signals in late summer), macro-sensitive park visitation, and lingering linear erosion. They also note that YouTube TV friction could hang over FY26 guidance if unresolved, and that investor patience on succession is finite.

Last quarter refresher and context. Disney topped EPS on the strength of streaming profitability and resilient theme-park per-caps, though total revenue slightly missed. Management leaned into a clearer streaming strategy (unified Disney+ + Hulu app; Hulu as global general entertainment brand), an ESPN DTC launch date with rich functionality (betting, fantasy, multiview, personalization), and expanded NFL rights—including an NFL Network asset transaction that increases ESPN’s game inventory and is expected to be accretive in its first year post-close. Experiences momentum continued, with broad park and cruise expansions slated globally and multi-year project pipelines (Paris, California Adventure, Magic Kingdom, Abu Dhabi) positioning FY26–FY27 for operating leverage. The tone was confident: “building the Economic OS” for streaming and the “preeminent digital sports platform” for ESPN, while reinforcing cost discipline and margin targets in DTC.

Setup on the chart. Shares have respected the 200-day MA for weeks and are pressing higher into the print; a clean beat/guide could push a break above $120 with $123 as first serious resistance. Miss the beats or muddy FY26, and the 200-day becomes the line in the sand. Translation: the narrative needs confirmation, not reinvention.

Bottom line. The path to a re-rating is straightforward: prove streaming’s margin is scaling, show Experiences can compound operating income despite mixed attendance, and de-risk ESPN’s DTC economics. Do that while reaffirming a double-digit EPS trajectory for FY26, and Disney has a credible shot at reclaiming a premium multiple—and that $120–$123 range becomes a speed bump, not a ceiling.