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All eyes and ears were on the Walt Disney Co. after Tuesday’s stock market close as Wall Street dissected the Hollywood conglomerate’s quarterly earnings and management commentary on the impact of the novel coronavirus pandemic.
But Wall Street also wanted to get a better feeling for how new Disney CEO Bob Chapek was doing on his first earnings-call appearance since his ascension that came just as the virus started spreading globally, making for a baptism by fire for the company veteran in his new role.
“All things considered, Bob Chapek did a superb job managing his first earnings call, particularly as this call was likely the most challenging call for the company since right after September 11,” Moody’s analyst Neil Begley told The Hollywood Reporter. “Also, his most recent previous position as head of the [theme] parks division uniquely positioned him to address the questions focused on the parks segment, which was most dramatically impacted by COVID-19. He managed those queries with particular detail surrounding how parks will reopen, specifically the park that is soon to open in Shanghai.”
CFRA Research analyst Tuna Amobi echoed that sentiment. “He probably did as well as one might have expected of a company veteran during this initial go-round, going out of his way, at times, to signal his alignment with the company’s strategic mandates,” he said. “I also thought he provided some incisive and value-adding responses to some questions, particularly those related to the current situation around the worldwide theme parks and other areas of his core competencies.”
Amobi acknowledged though that Chapek will need more time to dive deeper into other divisions. “There are still other businesses, most notably including streaming and creative businesses, where he probably needs a lot more hands-on exposure to speed up the learning curve, even as the unexpected COVID-19 disruption has added another significant layer of complexity as well as uncertainty,” he said.
Needham & Co. analyst Laura Martin in a Wednesday report argued Chapek’s skill set is key for the virus pandemic. “Disney’s assets will still be world-class post-COVID-19, even if certain return on invested capital suffer for one to three years,” she wrote. “Bob Chapek (Disney’s new CEO from parks) is the right guy to make tough cost calls, as parks will be the key driver of earnings per share variance for the next 12 to 18 months.”
MoffettNathanson analyst Michael Nathanson in a report maintained his “neutral” rating on Disney and shared his challenges in assessing the stock’s outlook in a new, longer-term way. “The reality of the situation is that Disney’s current-year earnings have no real bearing on the stock price,” he wrote. “The same could also be said of fiscal year 2021, which starts in October 2020. Thus, we have to train ourselves to look past those short-term annoying modeling questions and focus on the big picture and the long run. Yet that in itself is a problem, as the uncertainty index for Disney has never been this high.
Nathanson also told THR that he agreed with his peers that Chapek “did a very good job in handling tough questions in a very uncertain time.” But given the tough times and coronavirus pandemic uncertainties, the analyst added: “He will never forget his first earnings call.”
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