Software company Adobe Inc (NASDAQ:ADBE) could provide another example of a company utilizing artificial intelligence for new products and financial growth when the company reports third-quarter financial results after market close Thursday.
Earnings Estimates: Analysts expect Adobe to report third-quarter revenue of $5.37 billion. That’s up from $4.89 billion in last year’s third quarter, according to data from Benzinga Pro.
The company has beaten analyst revenue estimates for six straight quarters and nine of the last 10 quarters, overall.
Analysts expect Adobe to report third-quarter earnings per share of $4.53, up from $4.09 in the comparable period. The company has beaten analyst estimates for earnings per share in 10 straight quarters.
Guidance from the company calls for third-quarter revenue to be in a range of $5.33 billion to $5.38 billion. The company expects earnings per share will be in a range of $4.50 to $4.55 for the third quarter.
Adobe stock is down 0.7% year-to-date in 2024 as seen on the Benzinga Pro chart below.
What Analysts Are Saying: JPMorgan analyst Mark Murphy sees a positive setup for Adobe in the second half of 2024 as Generative AI monetization and pricing tailwinds factor in.
The analyst currently has an Overweight rating and $580 price target. He previously upgraded Adobe shares in June and added the stock to the analyst focus list in September.
“We reaffirm our positive fundamental bias on the setup for the 2H of the year, while we continue to see upside from current levels despite ADBE shares having traded up in the past several months,” Murphy said.
The analyst said Adobe shares could remain volatile after earnings and with variance in demand, but the view looks positive with the potential for “differentiated performance” in the third quarter.
“We continue to highlight an important potential trend change for a key metric in Adobe’s Creative Cloud Net New ARR, for which the company has outlined expectations for y/y growth in Q3 and Q4, following three consecutive quarters of y/y decline.”
Ongoing traction of Adobe’s GenAI portfolio is expected from the company in the third quarter by the analyst.
Citigroup: Maintained Neutral rating, raised price target from $550 to $621
Stifel: Maintained Buy rating, raised price target from $600 to $650
Oppenheimer: Reiterated Outperform rating, raised price target from $580 to $625
Barclays: Maintained Overweight rating, raised price target from $650 to $675
Key Items to Watch: Adobe’s earnings report comes one day after the company unveiled its AI video capabilities with the Adobe Firefly Video Model.
On Wednesday, Adobe showed off the new model that will extend what Adobe Firefly is capable of. Users will be able to generate video from text prompts and make adjustments to the images.
“Building upon our foundations Firefly models for imaging, design and vector creation, our Firefly foundation video model is designed to help the professional video community unlock new possibilities, streamline workflows and support their creative ideation,” Ashley Still, senior vice president, Creative Product Group at Adobe, said.
The new features will be available later this year.
Adobe could highlight the new video capabilities during its earnings report or on its conference call as another pillar of growth from AI.
The company highlighted “strong growth” from its cloud segments of Creative Cloud, Document Cloud and Experience Cloud in the second quarter and investors and analysts could be looking for a continuation of this growth.
Artificial intelligence will remain the major topic analysts and investors are looking for in Adobe’s third-quarter report.
“Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users,” Adobe CEO Shantanu Narayen said after second-quarter results.
ADBE Price Action: Adobe stock trades at $576.25 versus a 52-week trading range of $433.98 to $638.25.
The company’s latest patent is for an advertising system that could be used in future Ford vehicles. It would target advertisements based on s driver’s ending destination and/or the conversation held with the passenger.
As reported by Ford Authority, Ford filed the patent in February 2023 and had the patent published on Aug. 29, 2024.
The patent takes into account items like the driver’s GPS, current location and speed of the vehicle to select which ads to show inside the vehicle.
Ford could also select a number of ads to display each drive based on user preference and past history of interaction with ads, the patent says.
The patent shows that the audio signals inside the vehicle could also be used. That could mean more ads being displayed if the driver and passenger aren’t carrying on lengthy conversations.
Why It’s Important: Ford previously filed a patent for its in-vehicle advertising that could use the vehicle’s cameras to scan nearby billboards and display ads related to the subject matter of the billboards inside the vehicle.
A similar patent was also filed for potential advertisements and images to be displayed on windows inside the vehicle.
Being exposed to advertisements isn’t new for drivers or passengers. After all, vehicles are targeted by billboards and radio ads.
Just because Ford filed the patent doesn’t mean that the new advertisement method will come to fruition.
Software company Docusign Inc (NASDAQ:DOCU) could share more on its goal of improving profitability and recent company expansions when the company announces second-quarter financial results after market close Thursday.
Earnings Estimates: Analysts expect Docusign to report second-quarter revenue of $727.36 million according to data from Benzinga Pro.
The company reported revenue of $687.69 million in last year’s second quarter. Docusign has beaten analyst estimates for revenue in more than 20 straight quarters, according to Benzinga Pro.
Analysts expect the company to report earnings of 80 cents per share for the second quarter. That’s up from 72 cents in last year’s second quarter. The company has beaten earnings estimates from analysts in eight straight quarters and 9 of the last 10 quarters overall.
Guidance from Docusign calls for second-quarter revenue to be in a range of $725 million to $729 million.
The second-quarter earnings report comes with Docusign shares trading nearly flat year-to-date in 2024. See the Benzinga Pro chart below.
What Analysts Are Saying: Docusign was one of several software companies highlighted in a recent note from RBC Capital with a Sector Perform rating.
RBC Capital said the software sector could benefit from investments in generative AI as spending on seat-based models from the COVID-19 pandemic era is minimizing.
“Software companies themselves saw significant margin expansion during COVID but now as they reinvest for GenAI including higher CapEx, margins are likely flat to up slightly in a best-case scenario, but in some cases going down,” RBC Capital said.
The software sector could be ripe for M&A momentum. Analysts say Docusign is one of several stocks that could be a private equity takeout consideration.
“Overall we continue to believe software M&A activity could accelerate and remain in the headlines following a busy start to the year with several potential deals in the press.”
Key Items to Watch: The company said the first quarter showed a strong start to the fiscal year and the launch of the Docusign Intelligent Agreement Management platform.
Investors and analysts will be looking for an update on this platform and how it is performing.
With many investors having their attention on artificial intelligence, an update on the AI opportunity for Docusign and how it is integrating AI tools and platforms for its customers could be a key item to watch in the earnings report.
The company also said the first quarter showed a focus on stabilizing the business and improving profitability. These two items could be keys for investors and analysts for the software company going forward.
DOCU Price Action: Docusign shares trade at $57.41 on Wednesday versus a 52-week trading range of $38.11 to $64.76.
Cloud and artificial intelligence revenue generation and future opportunities could be the key items analysts and investors are watching for in the second-quarter earnings report from Dell Technologies (NYSE:DELL) on Thursday after market close.
Earnings Estimates: Analysts expect Dell to report second-quarter revenue of $24.14 billion, according to data from Benzinga Pro.
The company reported revenue of $22.93 billion in last year’s second quarter. Dell has beaten analyst estimates for revenue in eight of the last 10 quarters, including two straight quarters.
Analysts expect the company to report second-quarter earnings per share of $1.71, which would be down from $1.74 reported in last year’s second quarter. The company has beaten analyst estimates for earnings per share in nine straight quarters.
The second-quarter earnings report comes with Dell stock up 46% year-to-date, as shown on the Benzinga Pro chart below.
What Analysts are Saying: Dell’s second-quarter results could be an opportunity for the company to show progress made on margins, JPMorgan analyst Samik Chatterjee said in a new investor note.
The analyst reiterated an Overweight rating and $160 price target ahead of earnings.
“With outlooks now even lower after the Super Micro print, we see a set up where investors will be relieved by significant progress made relative to ISG margins, with lower focus on other metrics, like AI server revenue and backlog, relative to prior quarters,” Chatterjee said.
Chatterjee said investors are concerned that cost cuts and workforce reductions are a sign of weakened demand.
“We believe these concerns will be trounced by the strong demand backup for AI servers, as evidenced by revenue guidance from Super Micro.”
The analyst said cost cuts are part of the company’s transformation and could help improve profit margins from its AI server opportunity.
“We are more positively inclined toward the AI-driven compute investment cycle, which should benefit branded server companies.”
Chatterjee said that while Dell isn’t a primary beneficiary of the AI investment cycle, server companies will benefit from selling higher-end servers with higher average sale prices.
Key Items to Watch: Artificial intelligence will likely be top of mind for investors when reading Dell’s earnings report. The company will be reporting quarterly financial earnings a day after NVIDIA Corporation, one of the companies that is leading the growth of AI use cases.
In its first-quarter financial earnings, Dell made their AI opportunity known.
“No company is better positioned than Dell to bring AI to the enterprise,” Dell Chief Operating Officer Jeff Clarke said.
The first quarter saw AI-optimized server orders growing, with shipments up more than 100% quarter-over-quarter. The backlog of the servers also was up 30% to $3.8 billion in the first quarter.
With the report coming after Nvidia, Dell could have a high bar to clear when talking about its AI opportunity once again.
While many analysts have been cutting their price targets, CNBC host Jim Cramercalled the bottom in the stock in mid-August, following an upgrade from Barclays.
“Historically, you want to buy this company after it’s been hammered. Regardless, it’s just been right to do that, so I agree with Barclays. This stock should be bought right here,” Cramer said.
Cramer also highlighted the fact that Dell CEO Michael Dell was “singled out” at an Nvidia event as a person to do business with, suggesting that Dell could be a strong contender in the AI sector.
DELL Price Action: Dell shares are down 1.4% to $110.22 on Wednesday, versus a 52-week trading range of $53.62 to $179.70.
All signs point to analysts and investors looking to see if Chewy Inc (NYSE:CHWY) can keep up recent momentum and financials ahead of estimates when second-quarter results are reported Wednesday, Aug. 28 after market close.
Earnings Estimates: Analysts expect Chewy to report second-quarter revenue of $2.86 billion compared to $2.78 billion in last year’s second quarter, according to data from Benzinga Pro.
The company has beaten revenue estimates from analysts in two straight quarters and seven of the past 10 quarters overall.
Analysts see Chewy reporting second-quarter earnings of 2 cents per share, compared to 15 cents per share in last year’s second quarter. The company has beaten analysts’ estimates in nine straight quarters.
Guidance from the company calls for revenue to come in a range of $2.84 billion to $2.86 billion.
Anmuth sees strong execution by the company and the potential for customer growth in the second half of the fiscal year.
“We believe pet is a growing and a highly attractive category that is early in the shift online, and, in our view, Chewy is well-positioned as the leader in online pet with a ~33% market share,” Anmuth said.
Anmuth said secular growth, the shift to online sales, and growth of pharmacy, services and international expansion could all be catalysts for Chewy.
“We continue to like CHWY’s category positioning, improving profitability, and efforts to diversify revenue into healthcare, international & sponsored Ads.”
The analyst said pharmacy and private label are among the fastest growth areas for the companies and also come with high margins.
Chewy’s Autoship subscriptions plan also serves as a competitive advantage, Anmuth said.
While Chewy shares are up only 8.6% year-to-date in 2024, Anmuth highlights that the stock is up 660% since first-quarter financial results, as illustrated in the Benzinga Pro chart below.
Key Items to Watch: There are many items to watch when Chewy reported with new business verticals like health care among the top items investors and analysts may be watching.
The cross-promotion of pet food and pet care products has resulted in higher net spending per customer in recent quarters.
Chewy also opened several veterinarian clinics with plans to open more in 2024. Investors and analysts could get an update on how this newer segment is performing and what plans are.
Chewy Plus, a paid membership program in beta, could also be a key item shared in the company’s results and outlook.
“Chewy’s value proposition continues to resonate with our customers, and I am proud of the teams at Chewy who are executing flawlessly on our strategic roadmap and the controllable elements of our business,” Chewy CEO Sumit Singh said after first-quarter results.
A $500 share buyback announced in the first quarter could also be a key highlight in the second-quarter results and future guidance.
CHWY Price Action: Chewy shares are down 3.90% to $25.66 on Monday versus a 52-week trading range of $14.69 to $39.10. Chewy stock is down 1.7% over the past year and up 8.6% year-to-date in 2024.
With its second-quarter earnings on deck, the stock could remain highly volatile in its recovery mode.
What Happened: CrowdStrike is hitting out at competition that could be looking to win customers away after the company’s global outage, which is likely to be a key topic when the company reports second-quarter financial results.
Analysts expect the company to report second-quarter revenue of $958.70 million, compared to revenue of $731.6 million in last year’s second quarter, according to data from Benzinga Pro.
Earnings per share are expected to come in at 98 cents per share versus 74 cents per share reported in last year’s second quarter.
CrowdStrike has beaten both revenue and earnings per share estimates from analysts in more than 10 straight quarters, putting its streak on the line Wednesday, Aug. 28 when it reports after market close.
Previous guidance from the company calls for revenue between $958.3 million and $961.2 million and earnings in a range of 98 cents to 99 cents per share.
While second-quarter results could be minimally impacted by the global outage on July 19, the real key will be guidance and commentary on what happens next.
CrowdStrike previously raised full-year guidance for revenue and earnings per share. Those figures could be in question with the potential loss of revenue from customers leaving and the potential money set aside for lawsuits and settlements as legal challenges mount.
The company is likely to share how it has fixed the issue, progressed and moved on, and what it’s doing to win back customer support and accounts. Shares could move based on the commentary and guidance being lowered or raised, or the company simply reiterating the already heightened figures.
Why It’s Important: A quick look at the CrowdStrike year-to-date chart from Benzinga Pro shows shares are actually up 4.8% in 2024.
Shares fell from a close of $343.05 on July 18 to open at $294.51 on July 19 and trade between $290.10 to $316.75 on the day of the global outage.
CrowdStrike shares have fallen since and were also hit on Aug. 5 when the stock market saw significant drops for companies, with the technology sector hit hard.
Over the past month, shares of CrowdStrike are down 1.4%, nearly recovering from the Aug. 5 losses and continued drop.
A positive earnings report and/or a positive update on guidance could kickstart a rally in shares and get closer to the $294.51 opening price on July 19, as well as closer to the $343.05 level last seen before the outage.
CRWD Price Action: CrowdStrike shares closed Thursday at $267.64 versus a 52-week trading range of $141.97 to $398.33.
Each week, Benzinga’s Stock Whisper Index uses a combination of proprietary data and pattern recognition to showcase five stocks that are just under the surface and deserve attention.
Investors are constantly on the hunt for undervalued, under-followed and emerging stocks. With countless methods available to retail traders, the challenge often lies in sifting through the abundance of information to uncover new opportunities and understand why certain stocks should be of interest.
Here’s a look at the Benzinga Stock Whisper Index for the week of Aug. 16:
AST SpaceMobile (NASDAQ:ASTS): The satellite and space-related company was one of the stocks with the highest interest over the past week, which comes after quarterly earnings and a company update. Among the updates was that the company is on track to launch five satellites in early September.
“We stand at a pivotal moment for AST SpaceMobile. The arrival of our first five commercial satellites at the launch site marks the culmination of years of relentless innovation and perseverance, in partnership with industry leaders like AT&T, Google, Verizon, Vodafone and Rakuten, among others,” AST SpaceMobile CEO Abel Avellan.
Avellan said the upcoming launch is “a significant step toward fulfilling our mission to eliminate dead zones and empower communities worldwide with space-based cellular broadband connectivity.”
The BlueBird satellites are expected to be part of a nationwide, non-continuous service for AT&T and Verizon beta test users in the coming months.
After the company update, B. Riley Securities analyst Mike Crawford maintained a Buy rating and raised the price target from $15 to $26. UBS also maintained a Buy rating and raised the price target from $13 to $30.
AST shares were up over 40% on the week, as seen on the Benzinga Pro chart below. Shares of the satellite company are up over 400% year-to-date in 2024.
Cingulate Inc (NASDAQ:CING): The clinical-stage biotech saw shares surge during the week following a patent granted in Europe.
The patent covers the company’s lead asset CTx-1301, which is a treatment for Attention Deficit Hyperactivity Disorder, also known as ADHD. The patent covers up to 30 European territories. News of the patent comes as the company is preparing to file a new drug application with the FDA for the U.S. The NDA is expected to be filed in the first half of 2025.
Cingulate shares are up over 100% in the past five days, as seen on the Benzinga Pro chart below. The stock is down over 90% year-to-date.
Palantir TechnologiesInc (NYSE:PLTR): The software company continues to see strong interest from Benzinga readers with its presence in the artificial intelligence sector.
Palantir reported second-quarter financial results recently with revenue up 27% year-over-year, beating consensus estimates from analysts. The company’s customer base was up 41% year-over-year.
The company also shared details of a collaboration with restaurant company Wendy’s and an expanded partnership with Microsoft for AI tools.
“The growth of our business has been re-accelerating steadily, and we see an unprecedented opportunity ahead to capture and build on that momentum,” Palantir CEO Alex Karp said.
In a recent poll of Benzinga readers, Palantir was selected as the winner among five non-Mag 7 AI stocks as the company that will outperform in the coming year. Palantir won with 32% of the vote, beating out Advanced Micro Devices, Taiwan Semiconductor Manufacturing, Intel and C3.ai.
Workday Inc (NASDAQ:WDAY): The software company saw strong interest from investors over the last week, which comes ahead of second-quarter financial results.
Workday will report second-quarter financial results on Aug. 22. Analysts expect the company to report earnings of $1.65 and revenue of $2.07 billion. Workday has beaten analyst estimates for earnings per share in eight straight quarters and nine of the last 10 quarters. The company has also beaten revenue estimates in more than 10 straight quarters.
Workday shares fell in May after reporting first-quarter financial results and lowering guidance.
Bank of America recently lowered its price target for Workday from $275 to $265 and Wells Fargo lowered its price target from $275 to $260. Analysts and investors will be closely watching second-quarter results to see if the company can beat estimates and if full-year guidance can improve.
Snap Inc (NYSE:SNAP): The social media stock saw high interest from readers, which may be for negative reasons. A 13F filing from Soros Fund Management revealed the fund sold 1.4 million Snap shares in the second quarter, exiting its position. Snap’s recent second-quarter financial results showed revenue of $1.24 billion falling shy of analyst estimates.
While the company could becoming irrelevant and losing to competitors, there were several positives in the quarter. Revenue was up 16% year-over-year and daily active users were up 9% year-over-year.
Snap shares were up on the week, but are down 45% year-to-date in 2024. With shares trading near 52-week lows of $8.28, investors could see potential future value with new product launches and a focus on AI.
Retail giant Walmart Inc (NYSE:WMT) could provide analysts and investors a better picture of how inflation impacts consumer spending and shopping habits when it reports second-quarter financial results before the market opens on Thursday.
Earnings Estimates: Analysts expect Walmart to report second-quarter revenue of $168.57 billion, according to data from Benzinga Pro.
The company reported revenue of $161.63 billion in last year’s second quarter. Walmart has beaten analysts’ revenue estimates in 17 straight quarters.
Analysts expect Walmart to report second-quarter earnings per share of 64 cents, compared to 61 cents per share reported in last year’s second quarter. Walmart has beaten analysts’ earnings per share estimates in eight of the last 10 quarters. It has beaten or made estimates in eight straight quarters.
Walmart’s guidance calls for second-quarter earnings per share in a range of 62 cents to 65 cents.
The earnings report comes with Walmart stock up 30% year-to-date, as seen on the Benzinga Pro chart below, beating the performance of many broad stock market indexes.
What Experts Are Saying: Walmart could be a “safe haven in weak markets,” JPMorgan analyst Christopher Horvers said in a recent investor note.
The analyst has an Overweight rating and $81 price target. Walmart could beat earnings estimates and raise guidance, a rare occurrence in the retail sector of recent, Horvers said.
“Defense and offense win championships,” he added.
The analyst said there is an increased risk of concern from Walmart investors of a potential consumer deceleration.
“Our mid-July Nielsen analysis suggested upside to U.S. grocery comps while value players continue to gain share and grocery price gaps widening.”
Horvers said it’s potential that Walmart has been cautious on the revenue outlook for the second half of 2024.
“WMT is likely one of the few beat-and-raise stories in retail, it continues to gain share, it’s a safe-haven stock.”
Placer.ai data points to potential higher customer counts in the second quarter with visits up 3.9% for Walmart and 7.5% for Sam’s Club on a year-over-year basis in the second quarter.
Freedom Capital Markets Chief Global Strategist Jay Woods highlighted Walmart as one of the most important earnings reports of the week when showing the technical of the stock in his weekly newsletter.
“Walmart remains the cream of the crop in the retail and consumer staple world,” Woods said.
Woods said the hope for Walmart is that they overcome a trend of stocks beating earnings and then not making a new leg higher for their stock.
“The downside is that when companies have missed they tend to fall quickly and test key support areas.”
Key Items to Watch: Walmart’s earnings report could provide key commentary on consumer shopping trends including size of order, trading down from brand names to private brands and more.
With inflation concerns easing, Walmart could provide a look on if this means higher ticket items have seen an uptick in volume.
Walmart’s ecommerce sales could be another key item to watch. The company reported a 21% increase ecommerce sales in the first quarter.
Walmart also reported a 24% increase in advertising revenue in the first quarter. This could also be a key item to watch in Thursday’s report.
WMT Price Action: Walmart shares trade at $68.44 on Wednesday versus a 52-week trading range of $49.85 to $71.33.
Home improvement retailer Home Depot Inc (NYSE:HD) could see strength in consumer home repairs and a potential housing market rebound factor into second-quarter financial results and future guidance when the company reports earnings Tuesday before the market open.
Home DepotEarnings Estimates: Analysts estimate Home Depot will report second-quarter revenue of $43.38 billion, according to data from Benzinga Pro.
The company reported revenue of $42.92 billion in the comparable period last year. Home Depot has beaten analyst revenue estimates in three of the last five quarters and seven of the last 10 quarters.
Analysts estimate the company will report second-quarter earnings per share of $4.50 compared to $4.65 in last year’s second quarter. Home Depot has beaten analyst estimates for earnings per share in 16 straight quarters.
What Analysts Are Saying: While there are concerns that Home Depot could cut guidance, JPMorgan analyst Christopher Horvers sees the stock as a high-quality name.
The analyst maintained an Overweight rating on Home Depot and raised the price target from $377 to $400.
Horvers lowered estimates for Home Depot’s same-store sales in the second quarter and full fiscal year.
“Big picture, we are lowering SSS to -3.0% given weather headwinds earlier in the quarter and lagging weakness in large Pro,” Horvers said.
The analyst said second-half guidance from key Home Depot vendors also led to estimate cuts.
“Like may of our more rate-sensitive retailers that experienced a COVID boom, the flip to positive trends continues to be deferred with a softer consumer and persistently higher mortgage rates, despite share of wallet back to pre-COVID levels.”
Home Depot management is optimistic on the “long-term housing dynamics,” the analyst said.
“We believe the recent reduction in long-term rates will spur demand as existing home sales remain at 40-year lows.”
Data from retail data firm Placer.ai suggests that Home Depot was one of several retailers that saw foot traffic increase in the second quarter.
In the second quarter, foot traffic was up 1.1% year-over-year at Home Depot stores according to a Placer.ai report. This marks an improvement over data tracked in the first quarter, which found Home Depot foot traffic up 0.2%.
The 1.1% year-over-year increase for Home Depot stores was also ahead of Lowe’s foot traffic up 0.6% year-over-year, according to the report.
Placer.ai said the data could point to a “thawing housing market” leading to more demand for home improvement items as homeowners look to home repairs over moving.
The report also saw that cross-shopping behind Home Depot and Lowe’s (NYSE:LOW) was up in the second quarter, which could mean homeowners are taking on bigger home repairs and comparing prices or buying items from both large home improvement retailers.
Telsey: Maintained Market Perform rating and $360 price target
Truist: Maintained Buy rating and lowered the price target from $406 to $396
Stifel: Maintained Hold rating and raised the price target from $374 to $380
Key Items to Watch: Key items like sales, comparable sales and earnings will be closely watched by analysts and investors Tuesday.
Another key item, which relates to the Placer.ai data, could be average ticket size.
In the first quarter, the average ticket at Home Depot was $90.68, down 1.3% year-over-year. Investors and analysts will likely want to see this figure rise and an increase could suggest that larger home repair projects are being completed.
Home Depot CEO Ted Decker cited softness in “larger discretionary projects” back in the first quarter.
Home Depot’s commentary on consumer spending could signal whether the housing market is rebounding and customers are spending more at home improvement stores or vice versa.
HD Price Action: Home Depot shares are trading at $345.41 Monday versus a 52-week trading range of $274.26 to $396.87. Home Depot shares are up 4.7% over the last year and down 0.3% year-to-date.
The home retailer trails the stock performance of peer Lowe’s, which is trading 5.4% higher over the last year and is up 4% year-to-date.
Lowe’s reports second-quarter results Aug. 20, and Lowe’s stock could react to any read-through from the Home Depot report.
The recent box office success of The Walt Disney Company (NYSE:DIS) and its Disney+ streaming platform will likely be the most talked about items from the company’s third-quarter earnings, which come before market open Wednesday August 7.
Earnings Estimates: Analysts expect Disney to report third-quarter revenue of $23.11 billion according to data from Benzinga Pro.
The company reported revenue of $22.33 billion in last year’s third quarter and has missed analysts’ estimates for revenue in four straight quarters.
Analysts expect the company to report third-quarter earnings per share of $1.20 compared to $1.03 reported in last year’s third quarter. The company has beaten analysts’ estimates for earnings per share in four straight quarter.
Disney reported earnings per share of $1.22 and $1.21 in the first two fiscal quarters respectively, which could make the third quarter the lowest total.
What Analysts Are Saying: Disney’s content slate shows signs of a turnaround with Bob Iger at the helm as CEO, Bank of America analyst Jessica Reif Ehrlich said in a July investor note.
The analyst said Iger made two critical changes with a restructuring of divisions to put control back in the hands of creative executives and putting an emphasis on quality content over quantity.
Ehrlich said the box office performance of “Inside Out 2” may have indicated the turnaround has begun with the $1 billion milestone hit. A balance of originals and strong IP is seen in the upcoming content slate, the analyst said.
“Excitement around upcoming titles including ‘Deadpool & Wolverine,’ ‘Moana 2′ and ‘Mufasa: The Lion King’ give us cautious optimism that DIS’ studio will continue to improve,” Ehrlich said.
Outside of the box office, the analyst sees Disney’s Experiences segment as a “key long-term driver” for the company. The segment generates steady profits and has improving margins for international parks, Ehrlich said.
“DIS has a collection of best-in-class premier assets (in content/IP as well as Theme Parks).”
Morgan Stanley: Maintained Overweight rating and lowered the price target from $130 to $110
Loop Capital: Maintained Buy rating and lowered the price target from $139 to $130
Needham: Reiterated Buy rating and $145 price target
MoffettNathanson: Maintained Buy rating and lowered the price target from $130 to $125
Key Items to Watch: The box office performance for Disney in recent months will likely be a key topic for the Q3 results and for what’s next.
In its first 19 days of release, “Inside Out 2” grossed $469 million domestically and more than $1 billion worldwide. The film helped Disney pass the $1 billion milestone that none of its films hit 2023, ending a long streak.
Also released in the third quarter was “Kingdom of the Planet of the Apes,” which ranks ninth domestically and eighth worldwide with box office totals of $171 million and $397 million respectively.
Another topic during the earnings release and conference call will likely be the success of “Deadpool & Wolverine,” which was released in July and will be part of fourth-quarter results.
The movie has grossed $395 million domestically and $824 million worldwide, setting many records for an R-rated film and on its way to also pass the $1 billion milestone.
The rebound of Disney’ box office performance could be a key topic and also comes ahead of other 2024 releases like “Mufasa: The Lion King” and “Moana 2.”
Investors and analysts will also want to hear about Disney’s direct-to-consumer segment that includes Disney+.
Disney ended the second quarter with 117.6 million core Disney+ subscribers, while also sharing that it would crackdown on password sharing. The company is also increasing prices for its ad-supported tier from $7.99 to $9.99 and its ad-free tier from $13.99 to $15.99, as reported by The Hollywood Reporter Tuesday.
The price increase comes around a year after the company last announced an increase that went effective in October that impacted ad-free tiers. The new increase hits multiple plans and could be a key topic of discussion.
DIS Price Action: Disney shares are up 3% to $90.57 on Tuesday versus a 52-week trading range of $78.73 to $123.74. The Benzinga Pro chart below shows Disney shares are trading flat year-to-date in 2024.
