Mickey Mouse will have some big shoes to fill on Tuesday afternoon. Walt Disney (NYSE: DIS) steps up with its fiscal first-quarter results shortly after market close, and Wall Street's bracing for a rough quarter. Analysts see revenue slipping 1% to $15.18 billion for the holiday-containing quarter. They also see earnings per share falling to $1.55 from $1.89 a year earlier.
Improvement at Disney's resilient theme parks division will likely be countered by challenging comparisons elsewhere. There were no theatrical debuts coming close to the prior year's Star Wars: The Last Jedi and Thor: Ragnarok releases. Disney's struggles with its consumer products division and ESPN-led media networks segment are well known.
The market is already settling for a ho-hum quarter, and that's not a bad thing. The stock's real chance to move higher or lower come Wednesday morning will depend on what Disney has to say on Tuesday afternoon. Let's go over a few things that need to go right for the bulls to win the week.
Image source: Disney.
1. Finish up the Fox hunt
It's been 14 months since Disney announced its intention to acquire most of the prized Twenty-First Century Fox (NASDAQ: FOX) (NASDAQ: FOXA)in a deal initially valued at $52.4 billion. A bidding war later catapulted the value of the transaction north of $70 billion.
Disney has always pointed to early 2019 as the timeline for the deal to close. Everything seems to be pointing to that acquisition of juicy Fox assets closing in the coming weeks, seemingly once Disney concludes the sale of Fox's regional sports networks. Disney will naturally discuss the transaction during Tuesday's earnings call, shedding new light on the pairing.
Disney shares didn't race higher following the initial deal announcement, and obviously investors weren't thrilled about the subsequent bidding war. Now that we're looking at what may be Disney's last quarter without Fox in its fold, any insight it can offer can move the stock.
2. Streaming plans need to remain on track
It's been two years since Disney announced that it would roll out its own ESPN streaming service in 2018, followed by a Disney-branded platform in 2019. The timeline eventually shifted to "late 2019" for the ambitious Disney+ rollout. Is the debut about to pushed back again?
New York Times media reporter Ed Lee was on CNBC's Squawk Box on Monday morning, warning that it may be harder to launch Disney+ this year than the market believes. There are a lot of moving parts to the platform, and a debut in 2019 isn't a layup. Disney will need to confirm the timeline for Disney+, and a little more color on what will make the platform unique wouldn't hurt.
3. Theme parks need to "use the force" in 2019
The biggest theme park expansion for Disney on both coasts in 20 years is taking place this year. Star Wars: Galaxy's Edge will open in Disneyland as early as June, followed by a late fall debut at Walt Disney World.
The 14-acre expansion at Disneyland and Disney's Hollywood Studios will bring a wave of tourists to both resorts. It better be worth it, and it better not be late. Disneyland is counting on Star Wars: Galaxy's Edge to drive its traffic higher during the busy summer season, and it recently increased ticket prices ahead of the opening. Disney World's opening should come in November, just in time for the peak holiday visitors. Announcing a firm opening date for Disneyland would be huge, but any signs of a delay for either expansion can trip up advance reservations to the resorts for 2019 travel.
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