Key issues in the run-up to the Disney's quarterly report

Disney is set to release its quarterly report after the end of trading on Tuesday.

Analysts largely expect the media conglomerate to do well, especially after the company posted better results in the previous quarter.

Citing an industry-wide push for streaming, Macquarie analyst Tim Nollen said Disney would be the only company likely to succeed in the transition to new content delivery realities.

Wall Street expects Disney+ subscribers to grow by 9.4 million after a surge of 14.4 million in the previous quarter. At the same time, the company lowered its 2024 subscriber forecast to a range of 215 million to 245 million paid users — down from a previous forecast of 230 million to 260 million.

Combined with the increase in subscribers, Disney's ad-supported subscription is expected to debut next month at $7.99 a month, $1 higher than rival Netflix.

Macquarie's Nollen said it's the usual question of what do subscriber additions look like but with the added layer of what is the advertising tier going to bring for Disney+ in terms of revenue and earnings upside.

The analyst, who reiterated his "Above Market" rating for Disney stock and kept his target price at $140 a share, wrote that he sees the possibility of $800 million in ad sales next year.

He said advertisers will want to be on Disney+ and Netflix, as Disney may even have an advantage over Netflix because of the company’s experience with advertising on Hulu

Disney+, Hulu and ESPN+ lost a total of $1.1 billion in the third quarter, though the company maintained its goal of reaching streaming profitability by 2024.

Disney CFO Christine McCarthy added that she expects Disney+ to peak losses this year.

Nollen stated that Disney is committed to reaching streaming breakeven by 2024. He also added it’s five quarters from now.

Overall, the analyst explained "direct-to-consumer is a positive for Disney". He assumes that the slowdown in Netflix subscriber growth was a direct result of the launch of Disney+. 

Nevertheless, macroeconomic concerns could cloud the outlook and trigger a potential sell-off in the stock. Nollen advised investors to pay close attention to earnings trends or any warning signs that might indicate that consumers are starting to save.

Looking ahead, the analyst concluded that the macroeconomic outlook and concerns about consumer spending for next year probably remain the main driver of stocks right now. Also according to his statement, no matter how good the current numbers are, the outlook may not remain encouraging for some time.