Disney Stock Priced for Pain, But Avengers: Doomsday Could Bring Relief

Walt Disney Co (NYSE:DIS) is set to report its third-quarter financial results on Wednesday, and investors are looking for signs of optimism. Despite the stock being priced for more negativity, analysts believe that 'Doomsday' - a reference to the upcoming Avengers film - could be just what the company needs to boost its share price.

Disney has beaten analyst estimates for revenue in two straight quarters and six of the past 10 quarters overall. For Q3, analysts expect revenue to reach $25.40 billion, up from last year's $23.65 billion. Earnings per share are expected to be $1.86, up from $1.61 in the same period last year.

Some analysts believe that exiting the streaming business could boost Disney's share price by 40%. Wells Fargo analyst Steven Cahall maintained an Overweight rating on the stock and lowered his price target from $146 to $125. He argues that refocusing on licensing and content creation would be a better cash generator than the direct-to-consumer business.

Key items to watch include mixed box office results for hit franchises, which could impact Disney's revenue. The company also faces potential issues with TV licenses due to its recent 109-page letter alleging retaliation from the Federal Communications Commission. Additionally, investors will be looking at the performance of Disney+ and advertising revenue.