Consumer Discretionary

Disney Expected To Emphasize FY24 Breakeven for Disney+

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Disney is aiming to break even on its direct-to-consumer business in the next year, UBS analysts say in a research note. The company’s challenges in linear, exacerbated in the recently-completed quarter by the Charter blackout, are also expected to continue, but the analysts anticipate Disney management will look to emphasize efforts such as price hikes, ad-supported streaming and cost discipline related to Disney+, which will push the streaming service toward profitability. The company reports 4Q results early next month.

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Netflix Q3 Results to Be ‘Largely’ In-Line With Expectations, UBS Says

/ / Consumer Discretionary /

Netflix’s (NFLX) Q3 results will be “largely” in-line with expectations, including similar subscriber net additions of 6 million for the quarter, compared with 5.9 million in Q2 and 2.4 million in the year-ago period, UBS Securities said Monday in a note. UBS said it estimates an 8.2% revenue growth in Q3 for Netflix, while the company projects 7.5%. The firm said it also expects Netflix to provide “solid” commentary for Q4, including seasonally stronger subscriber additions, further acceleration in revenue growth and stronger year-over-year margins. But UBS said it is lowering its 2024 estimates due to a more gradual build in advertising and more measured margin expansion because of higher content amortization and other investments. UBS cut its diluted EPS estimate for Netflix to $15.10 from $16.17 and revenue estimate to $38.24 billion from $38.64 billion for 2024. UBS maintained the company’s buy rating and reduced the price target to

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Delta Air Lines Appears To Be On A Smooth Course, Says Morgan Stanley

/ / Consumer Discretionary /

Morgan Stanley analyst Ravi Shanker reiterated an Overweight rating on the shares of Delta Air Lines Inc (NYSE:DAL) with a price target of $77. Delta reported a Q3 FY23 adjusted operating revenue growth of 13% Y/Y to $14.55 billion and operating revenue of $15.49 billion, beating the consensus estimate of $14.54 billion. Adjusted EPS of $2.03 was above the consensus of $1.94. The strength in premium continued as revenues came in +17% y/y, outpacing main cabin by 5 points, with management noting that domestic paid first class load factors are reaching new heights every month, said the analyst. Premium remains robust and Domestic paid load factor in the first class cabins was a record for the company, noted the analyst. Management expects trends to be consistent with 3Q and said that initial bookings for the peak holiday periods are strong, added the analyst. International remained the star of the show,

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Domino’s Expected 4Q Revival: Morgan Stanley Highlights US Store Growth

/ / Consumer Discretionary /

Morgan Stanley analyst Brian Harbour reiterated an Overweight rating on the shares of Domino’s Pizza Inc (NYSE:DPZ) with an unchanged price target of $435. The analyst said in 3Q, EPS ex-items were slightly below Morgan Stanley’s estimate. In 4Q, DPZ expects a return to positive same-store sales in the U.S., which the analyst has modeled north of 2%. Uber Technologies, Inc. (NYSE:UBER) Uber Eats is piloting in Las Vegas with Seattle, Detroit, Miami and Houston next to come and national expansion by year end and set to impact 2024 materially, noted the analyst. International units were a soft spot, not just Russia and DMP closures, but also gross openings, but DPZ addressed this by noting easing closures and a step up in 4Q openings, added the analyst.

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Domino’s Pizza (NYSE:DPZ)’s 3Q Fundamentals Look Weak Despite EPS Beat

/ / Consumer Discretionary /

Domino’s Pizza (NYSE:DPZ)’s posted 3Q earnings of $4.18 a share, soaring past the consensus estimate of $3.31 a share from analysts surveyed by FactSet, but the pizza chain’s fundamentals otherwise looked weaker than expected, Wells Fargo analysts say in a research note. There are some positive catalysts on the horizon, but the company’s year-to-date results have underperformed, the analysts say. US same-store sales declined slightly in 3Q while total revenue fell to $1.03 billion, below analyst forecasts. “While Q3 was downplayed from the start, today’s QSR backdrop is delicate, shares are crowded and softer ’23 sales/units aren’t helping the cause,” the analysts say.

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CFRA Lowers View On Shares Of Domino’s Pizza, Inc. (NYSE:DPZ) To Hold From Buy

/ / Consumer Discretionary /

We cut our 12-month target price to $370 from $445, 23.6x our 2024 EPS estimate, a discount to DPZ’s five-year average forward P/E of 30.3x, justified by continued softness in top-line growth. We raise our 2023 EPS estimate to $14.41 from $13.48 and 2024’s to $15.69 from $15.30. DPZ posted Q3 EPS of $4.18 (+49.8% Y/Y), $0.88 above consensus. Revenue of $1,027M (-3.9% Y/Y), was $21M below consensus. Operating income grew 7.4% Y/Y to $189M, in line with consensus, and the margin widened 190 bps Y/Y to 18.4%. DPZ’s same store sales fell 0.6% in the U.S., but grew 3.3% (ex-FX) internationally. DPZ noted continued food basket cost deflation, buoyed by the adoption and usage of its revamped loyalty program. While we’re encouraged by DPZ’s recent initiatives, including partnerships with Uber Eats and Microsoft, the magnitude and trajectory of the benefits remain uncertain. In addition, rising labor costs remain a

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