Disney's (DIS) pipeline of popular films could help promote a strong close to 2019.
Shares of the film, resort, and television giant sunk over 1% on Wednesday after a capital intensive streaming program drew concerns from investors.
One of the key concerns is that the catalyst remains out of view until after the first quarter, making many too timid to ride through the first quarter with the house of mouse.
"Subsequent to their earnings releases, I have made cautionary remarks about the near term price outlook for the share price of Alphabet (GOOGL) and Disney," Real Money Pro's Doug Kass noted. "Both are faring poorly today. I would not be bottom fishing in either."
That said, the post-first quarter outlook could brighten as numerous cash cow franchises and new releases hit the silver screen later this year.
"While the movie business always has hits and misses, the combination of Disney live action, Pixar, Marvel, and Lucas puts the DIS film slate in a league of its own in terms of annual earnings generation," RBC Capital Markets analyst Steven Cahall commented.
The slate he touches on includes multiple billion-dollar franchises set to build momentum this year, including Star Wars, Frozen, The Lion King and The Avengers.
Infinity War, the last Avengers series release, grossed over $2 billion alone and was heralded by critics. The new release in the series set for April 26, should stand to foment momentum from that massive installed audience base.
That slate will only be strengthened by the assumption of high-grossing franchises acquired from Fox (FOXA) , many of which have typically found themselves outside of Disney's family friendly wheelhouse. Possibly the highest profile among these titles is Deadpool, which CEO Bob Iger avowed he will keep on board without any kid-proofing.
"We do believe there is room for the Fox properties to exist without significant Disney influence over the nature of the content, meaning that we see that there is certainly popularity amongst Marvel fans for the R-rated Deadpool films, we're going to continue in that business," Iger said. "There's nothing that we've really seen in the Fox either library or in the activities that Fox is engaging in today from a standards perspective that would be of concern to us, as long as we're very carefully a branding them and making sure that we're not in any way confusing the consumer with product that would be sort of Disney products or the more traditional Marvel product."
The issue that will arise is the company's incredibly high comps the company will need to meet.
The release of the aforementioned Infinity War and Black Panther in 2018, both of which are in the top 10 for highest grossing movies of all time, have set the bar for Disney studios at an all-time high.
Further, the backlog of movies is largely slanted toward the third and fourth calendar quarters with only Captain Marvel and the live action adaptation of Dumbo set for the end of the first quarter
"Dumbo will not be released until the end of the quarter, meaning that the film will only be in the box office for two days before the quarter closes but all prerelease marketing expenses will be recognized in the quarter, making for outsized expenses that will negatively skew reported results," Jim Cramer's Action Alerts PLUS team noted.
So, as I said in my column in pre-market, timing will be pivotal for those touting the long side of Disney.