Wall Street Lunch: House Of Mouse Gets Some Momentum

Summary:

• Walt Disney (DIS) is rallying with strong fiscal Q4 results, projecting high-single-digit EPS growth in FY25 and double-digit adjusted EPS growth in 2025.
• General Mills acquired NXMH’s North American premium cat feeding and pet treating business for $1.45 billion, expanding its portfolio in the pet food category.
• Wholesale inflation in October matched expectations, with core PPI rising 0.3% M/M.

Listen below or on the go on Apple Podcasts and Spotify

Buyers impressed with DIS numbers for ’25 and ’26. (0:16) Annual PPI numbers come in a little hot. (3:40) Tilman Fertitta expected to go activist with WYNN. (5:30)

This is an abridged transcript of the podcast.

Our top story so far, Walt Disney (NYSE:DIS) is rallying as investors applaud the guidance that accompanied fiscal Q4 results that beat on the top and bottom lines.

Looking ahead, Disney sees high-single-digit EPS growth in FY25 vs. the implied guidance of +4%. For 2026 it expects double-digit adjusted EPS growth.

Goldman Sachs says 2026 guidance suggests EPS of ~$6 EPS vs. consensus of $5.73.

Disney also expects approximately $15 billion in cash provided by operations, about $8 billion of capital expenditures, and is targeting dividend growth that tracks earnings. On the buyback front, Disney set a target of $3 billion for the fiscal year.

For the most recent quarter, revenue growth of 6.3% year-over-year included gains across the Experiences (+1%) and Entertainment (+14%) segments, while the Sports segment saw flat revenue growth.

EPS for the quarter landed at $1.14 vs. $1.11 consensus and $0.82 a year ago. Free cash flow was up 18% to $4.03 billion. Notably, the entertainment segment operating income more than tripled year over year.

In streaming, Disney+ core subscribers were up 4% year-over-year to 122.7 million, vs. 119.9 million consensus. Disney+ Hotstar subscribers were up 1% to 35.9 million vs. 35.6 million consensus. Total Hulu subscribers edged up 2% to 52 million vs. 51.9 million consensus.

CEO Bob Iger said, “In Q4 we saw one of the best quarters in the history of our film studio, improved profitability in our streaming businesses, a record-breaking 60 Emmy Awards for the company, the continued power of live sports, and the unveiling of an impressive collection of new projects coming to our Experiences segment.”

Among other active stocks today, KeyBanc Capital Markets cut Zeta Global (ZETA) was downgraded by KeyBanc Capital Markets to Sector Weight from Overweight, saying short report arguments are “gaining traction.”

Shares are higher in very volatile trading after the company announced a $100 million stock buyback.

Analyst Jackson Ader said, “This is certainly not where we thought we’d be just a few weeks after initiating with an Overweight rating. We feel more than a little sheepish to be doing so, but moving to Sector Weight is the right move for us.”

“We believe that the growth story from expanding scaled customer spend on the extended platform, methodically adding sales capacity, and margin expansion remain key parts of the fundamental story but, with the short theses mounting and, as reflected in the share reaction, gaining traction, we do not anticipate the stock to trade on fundamentals until more clarity can be given,” he said.

General Mills (GIS) entered into a definitive agreement to acquire Whitebridge Pet Brands’ North American premium cat feeding and pet treating business from NXMH in a transaction valued at $1.45 billion.

The acquired business includes the Tiki Pets and Cloud Star portfolio of brands, which collectively make up $24 billion in retail sales within the broader $52 billion U.S. pet food category.

And ASML Holding (ASML) reaffirmed its long-term targets, buoyed by strong demand for its products and services amid an expected growth in semiconductor end-markets.

The Dutch firm—which makes extreme ultraviolet lithography machines—expects annual revenue between €44B and €60B, with a gross margin of ~56% and 60% by 2030. That would imply sales growth of 8% to 14% on average over the coming five years.

On the economic front, Wholesale inflation came in line with expectations in October, picking up from the pace in September.

The Producer Price Index rose 0.2% M/M, matching the consensus and up from +0.1% in September, which was revised from flat. On an annual basis, headline PPI increased 2.4% vs. +2.3% consensus and +1.9% prior (revised from +1.8%).

Core PPI, ex food and energy, rose 0.3% M/M, also in line with the consensus estimate, and up from +0.2% in September. Annual core PPI gained 3.1% vs. +3.0% consensus and +2.9% prior (revised from +2.8%).

Pantheon Macro economist Samuel Tombs says: “The subdued headline PPI masks some large increases in components that feed directly into core PCE.”

“PPI portfolio management prices leapt by 3.5%, driven by rapid stock price gains, while domestic air transportation prices leapt by 8.8%, the biggest October increase since records begin in 1990,” he said.

“The decline in jet fuel prices since the summer suggests that airline fares prices will drop back soon. Both these increases were larger than we anticipated, so we are revising up our forecast for the increase in the core PCE deflator to 0.30%, from 0.26% in the wake of the CPI figures. Core PCE inflation probably increased to 2.8%, from 2.7% in September, making no further progress towards the 2% target since May.”

Moving from inflation to the other part of the Fed’s dual mandate, initial jobless claims fell by 4,000 to 217,000, trailing the 224,000 expected. The four-week moving average was 221,000, a decrease of 6,250 from the earlier week’s unrevised average of 227,250.

In other news of note, billionaire Tilman Fertitta reported a 9.9% passive stake in Wynn Resorts (WYNN).

Fertitta, the owner of the Houston Rockets, reported owning 10.9 million shares in the casino operator. CNBC reports that while the stake is passive now, it’s expected that it will turn into a 13D filing, or activist position.

Fertitta first reported a Wynn stake in the fall of 2022, purchasing a 6% stake, which prompted speculation at the time that the casino and restaurant mogul could make a bid for the whole company.

And in the Wall Street Research Corner, BofA is out with its latest Global Fund Manager survey, and Long Magnificent 7 comes in still at the top of the most crowded trade.

Half of respondents in the November survey said buying the group – Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta (META) and Tesla (TSLA) – is the most crowded, up from 43% in October.

In addition, 28% of fund managers said they view long gold (GLD) as a crowded trade, and about 7% said they view long U.S. dollar (UUP) as crowded. Rounding out the top five are short the 30-year Treasury (US30Y) and long China stocks (FXI).

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

---

---