Disney’s next earnings come with an unusual $600 million boost

Walt Disney’s upcoming earnings report will come with an advantage most companies do not get: an extra week to generate revenue and profits.

Disney expects the additional week in its fiscal fourth quarter to contribute approximately $600 million to its total segment operating income, potentially making its results look stronger than they would during a typical reporting period.

But that temporary benefit is only part of the story.

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Disney is preparing to report its results amid rising streaming subscription prices, uneven theme park demand and renewed efforts to reduce expenses (think job cuts), even as it invests billions in new entertainment and vacation experiences.

A Morgan Stanley research report shared with TheStreet suggests the company has significant opportunities for future growth, particularly through its expanding cruise business and potential cost savings.

The investment bank raised its Disney stock price target from $125 to $133, maintaining its overweight rating despite slightly reducing some of its earnings estimates. It also expressed greater confidence in the company’s long-term growth potential.

Disney will report its fiscal fourth-quarter and full-year 2026 results on Nov. 17, before the market opens, followed by an earnings webcast at 8:30 a.m. ET.

What Wall Street expects from Disney’s earnings

Disney delivered stronger-than-expected earnings in its fiscal third quarter, reporting adjusted earnings of $2.06 per share, up from $1.61 a year earlier. Revenue increased 7% to approximately $25.25 billion.

The company also reaffirmed its full-year outlook, projecting adjusted earnings growth of approximately 16%, including the benefit of an additional reporting week.

Without that extra week, Disney expects approximately 12% growth.

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According to the company’s August shareholder letter, the additional week is expected to lift fourth-quarter revenue by roughly 1.5% to 2% and contribute $600 million toward projected total segment operating income of $4.9 billion.

It’s relevant because the calendar benefit will not recur in fiscal 2027, making for a more difficult year-over-year comparison.

Morgan Stanley expects Disney to report adjusted earnings of $6.85 per share for fiscal 2026, slightly below the $6.94 consensus estimate compiled by Refinitiv.

The investment bank expects earnings to increase to $7.39 per share in fiscal 2027 and $8.32 in fiscal 2028, despite challenges facing Disney’s streaming and theme park businesses.

Disney’s streaming, theme parks and movies face new challenges

Disney’s streaming business has become increasingly profitable, but maintaining that momentum could prove more difficult as subscription prices climb.

In the fiscal third quarter, operating income from Disney+ and Hulu subscription streaming services more than doubled to $712 million from $329 million a year earlier.

Subscription revenue increased 15%, supported by higher prices and subscriber growth. Advertising revenue, however, increased just 3%. Disney has already warned that softer advertising conditions, particularly in domestic streaming, could weigh on its fourth-quarter entertainment results.

The company also raised subscription prices in September, with Disney+ Premium and Hulu’s ad-free plans increasing to $21.49 per month from $18.99.

Because most existing subscribers began seeing those increases after the fiscal fourth quarter ended, their full financial effect will not be reflected in the upcoming results.

Theme parks present another important test.

Disney’s Experiences division generated nearly $10 billion in Q3 revenue, up 10% year over year, as domestic park attendance increased 3% and spending per visitor rose 4%.

But the company’s international business has been less consistent.

Disney previously warned that weaker attendance at its Asian theme parks could continue into Q4, even as domestic parks and cruise operations benefit from stronger demand.

Morgan Stanley’s latest report anticipates continued challenges overseas, forecasting a 1.4% decline in international park attendance in fiscal 2027.

Disney’s movie business is also facing pressure after CEO Josh D’Amaro acknowledged that the live-action Moana and Star Wars: The Mandalorian and Grogu fell short of box office expectations.

The company expects Moana’s performance and softer advertising demand to weigh on its Q4 entertainment results.

Disney’s stock is up 4.7% year to date.

Slaven Vlasic / Getty Images

Disney expands AI investments amid cost-cutting efforts

Despite the challenges, Disney is investing heavily in new attractions, technology and cruise ships while exploring ways to operate more efficiently.

On Nov. 9, the company announced a multiyear strategic partnership with Adobe to develop customized artificial intelligence tools for its theme parks, cruise operations, film studios and ESPN.

Disney Imagineering is already using Adobe’s Firefly Foundry technology to transform hand-drawn sketches into detailed visual concepts and accelerate the development of future attractions.

The partnership could help Disney shorten time spent on development processes, although the companies have not disclosed any specific cost-saving targets.

Meanwhile, Morgan Stanley believes Disney’s cruise expansion could become an increasingly important source of growth.

The company currently operates eight cruise ships and plans to expand its fleet to 13 by the end of the decade, including a licensed vessel in Japan.

Morgan Stanley estimates Disney Cruise Line could generate approximately $5.1 billion in revenue during fiscal 2027, with each additional ship potentially contributing $600 million to $700 million annually as operations mature.

But expanding these businesses is expensive, and Disney is simultaneously examining ways to reduce costs elsewhere.

In its August shareholder letter, management said it was evaluating reductions in labor and selling, general and administrative expenses to free up resources for future investments.

More recently, Disney reportedly asked managers in certain departments to identify opportunities for annual cost savings of up to 20%, potentially resulting in additional layoffs and reductions in other expenses.

As TheStreet previously reported, the latest restructuring discussions follow multiple rounds of job cuts across Disney’s businesses during 2026, with thousands of additional positions potentially at risk.

The company has not confirmed a final layoff figure or a companywide savings target.

Morgan Stanley estimates that reducing Disney’s approximately $83 billion annual expense base by 2% to 5% could produce roughly $1.7 billion to $4.2 billion in gross savings.

Those figures are hypothetical analyst scenarios, not announced Disney cost-cutting plans. The investment bank also expects that a substantial portion of any savings could be reinvested into growth initiatives.

Disney’s Nov. 17 earnings report could provide more clarity on how management plans to balance these competing priorities.

The extra reporting week may strengthen its fourth-quarter numbers, but Disney’s fiscal 2027 guidance will offer a more meaningful indication of how its investment and restructuring strategy is faring beyond the immediate impact.