In today's earnings post we will be covering Walt Disney Co, Novavax Inc and Priceline group. While studios and theme parks are likely to post good numbers for Disney, ESPN numbers and commentary will be the key thing to watch out for. Analysts expect Novavax to report 150% jump in revenues. Priceline is likely to report solid numbers again.
Commentary on ESPN will be the key driver of Walt Disney Co (DIS) stock after today's earnings.
Entertainment giant Walt Disney Co (NYSE:DIS) will report its third quarter earnings today, after the market close. Disney had released 'Guardians of Galaxies II' in the second quarter which fetched over $860 million worldwide. The company had also released 'Pirates Of The Carribean: Dead Man Tells No Tales" which grossed around $781 million worldwide and "Cars 3" which grossed around $286 million. While these numbers are impressive, Disney is facing tough year ago comparisons.
Disney's theme park segment has also been doing very well, especially its Shanghai Disneyland resort, which crossed the 10 million visitors mark much earlier than expected. During the conference call after Disney's second quarter earnings, CEO Bob Igor had this to say about the success "As the resort has become a true national destination in China, attendance is outpacing our most optimistic projections and the park’s performance is exceeding our expectations. The addition of the new Toy Story Land will only add to the park’s popularity and it’s just the first of several planned expansions in Shanghai". Investors will be expecting strong performance from the Studios and Theme Parks segments to make up for the headwinds its media segment is facing.
Disney stock has remained under pressure due to the strong headwinds faced by its Media segment, especially its ESPN franchise. Due to the recent trend of cord cutting, ESPN is bleeding subscribers. According to Nielsen, ESPN has lost more than 13 million subscribers in recent years, from a peak of about 100 million in 2011, to less than 87 million today. Also, subscribers are tuning in less frequently to watch sporting events and highlight shows. According to Nielsen, ESPN's rating fell by 14% YoY in June while ESPN2 saw a rating decline of 38% YoY. Disney is taking several steps to mitigate the fall in subscriber numbers.
On the top line front, Wall Street expects Disney to report revenues of $14.43 billion, slightly higher than what the company had reported last year. Analysts expect the House of Mouse to report an EPS $1.56, down from an EPS of $1.62 the company had reported in the third quarter last year. Earnings estimates have been trending down over the last three months. EPS estimate has come down from $1.7 ninety days ago to the current estimate of $1.56, a decline of 8%.
Novavax Inc (NVAX) revenues to grow by 150%.
Another company which will be reporting earnings today is clinical-stage biotechnology company Novavax Inc (NASDAQ:NVAX). Novavax made the headlines last September when investors wiped out 85% of its market cap in just a single trading day after the company had reported disappointing Phase 3 trial results for its lead product candidate RSV F Vaccine. The stock is down around 40% since July 24th after the company provided investors with a number of clinical updates. While the story on the updates was not exactly bad, it was not up to investors expectations. Novavax stock has lost around 90% of its value in the last two years.
Analysts expect Novavax to report a loss per share of $0.16, which is far better than the $0.29 loss the company had reported in the same quarter last year. On the top line front, analysts expect the company to report 151.5% growth in revenue from $2.5 million a year ago, to $6.5 million. The company is expected to continue burning its cash stockpile. Novavax had around $211.2 million in cash and marketable securities on its books at the end of March. This quarter's cash position could be lower by around $40 million to $50 million.
Can the rally in Priceline Group Inc (PCLN) stock continue?
Norwalk based online travel service provider Priceline (NASDAQ:PCLN) will report its second quarter earnings today, after the bell. Analysts expect the company to report an EPS of $14.2, almost 13% higher than what the company had reported in the second quarter of 2016 and higher than company's guidance range of $13.3 to $14. Priceline's recent earnings history has been chequered, with the company reporting beat in two of the last four quarters while missing in the other two. In the previous quarter, the company had delivered an earnings surprise of over 11%. Priceline's earnings estimate have been trending lower over the past three months. Wall Street's EPS estimate for Priceline is down over 5.5% from $15.02 ninety days ago to the current estimate of $14.2.
On the top line front, Wall Street expects the company to report a revenue of $2.99 billion which is 16.8% higher than $2.56 billion the company had reported in the same quarter last year. For the full year, analysts expect Priceline's revenue to be up by 15.5%. As can be seen from the chart below, Priceline has managed to grow its revenue by 5x over the last 10 years. As a result, its stock price is up over 3000% in the same time period. The stock is up almost 40% YTD. Given its solid fundamentals, Priceline stock still remains a good buy in the online travel industry. Credit Suisse recently upped their price target on Priceline stock to $2150 from $2020.
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