Media giant and theme park operator Disney (DIS) is scheduled to report results of its fiscal first quarter after the market close on Wednesday, February 8, with a conference call scheduled for 4:30 pm ET. What to watch:

BULLISH AHEAD OF RESULTS: In a research note ahead of earnings, Morgan Stanley said it remained optimistic that Disney’s Parks segment, which represents the majority of its earnings, can deliver healthy growth in fiscal 2023 and beyond. The firm continues to believe Disney can deliver significant earnings growth over the next several years. This growth is expected to come through continued growth at its Parks & Experiences businesses and a return to growth for its Media & Entertainment businesses in 2024. Morgan Stanley reiterates an Overweight rating on Disney’s shares, with a price target of $115, saying that a bull case of $150 would be dependent on materially increasing the contribution from the Media segment by both improving monetization and lowering costs.

FIRST PRINT SINCE IGER’S RETURN: Loop Capital keeps a Buy rating and $120 price target on Disney ahead of the company's earnings report, noting this will be the first address of returning CEO Bob Iger. The firm notes that while the company could reduce the overall Disney+ subscriber guidance, that would come with a corresponding reduction in marketing and possibly programming expenses. Loop Capital adds that with the overall streaming industry environment focusing more on profits than growth, Disney management may be able to provide a Disney+ profitability guidance for at least one quarter in 2024 with more conviction.

Wells Fargo thinks returning Disney CEO Bob Iger "will come out swinging" on the upcoming fiscal Q1 earnings call "to fend off criticism." The firm sees a refocus on intellectual property instead of subscribers, aggressive cost action and the potential for earnings upgrades. Wells expects Disney to back away from fiscal 2024 direct-to-consumer subscriber targets, in favor of empowering content creation and streaming profitability. The firm thinks the company will announce a $2B direct-to-consumer cost reduction program focused mostly on non-programming costs. With a proxy battle looming, management's best avenue to defend against activism is a higher stock price, Wells adds. The firm is bullish on Disney shares into the results and keeps an Overweight rating on the name with a $125 price target.

OUTLOOK: During the company’s last earnings call, Disney said direct-to-consumer operating results were expected to improve by at least $200M in the first quarter. "In the first quarter of fiscal 2023, we expect direct-to-consumer operating results to improve by at least $200 million versus the fourth quarter of fiscal 2022, with larger improvement expected in Q2, reflecting a couple of key factors. First, our recently announced price increases across our Direct-to-Consumer offerings in the U.S. should begin to modestly benefit ARPU and subscription revenue in the first quarter. However, given that the Disney+ price increase will not go into effect until towards the end of Q1, this benefit will be realized more fully in the second quarter. Similarly, we do not expect the launch of the advertising-supported tier of Disney+ in December to provide a more meaningful financial impact until later this fiscal year," CFO Christine McCarthy said.

The company also said it saw full year 2023 capex increasing to $6.7B, full year 2023 cash content spend to be in the low-$30B range, and full year 2023 revenue to grow at a high-single-digit rate.