4 big earnings hits: Disney, Eli Lilly, Alibaba emerge victorious; UPS falls flat

Here is your Pro Recap of the biggest earnings reports you may have missed this week and how analysts responded: numbers out of Disney, Eli Lilly, UPS, and Alibaba.

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Disney gains on price-hike scheme

Walt Disney (NYSE:DIS) led the Dow higher Thursday after the media conglomerate detailed plans to hike prices for its streaming business to boost growth, even despite its fiscal third-quarter revenue miss.

The company's top line came in at $22.33 billion, just under the $22.49B consensus, although adjusted EPS of $1.03 beat estimates by $0.04.

Subscribers to its Disney+ streaming service also fell to 146.1 million, missing estimates of 151.1M, pressured by a 24% slide in subscribers on the Hotstar streaming platform in India.

Disney plans to raise prices for its ad-free streaming services, including Disney+ and Hulu - ad-free Disney+ will cost $13.99 monthly, $3 more than before - but ad-supported tiers will remain unchanged.

Disney also said that, starting next month, it will charge $24.99 per month for its "Trio Premium" bundle of Disney+, Hulu, and ad-supported ESPN+ - up from $19.99 previously. And a new ad-free premium bundle of Disney+ and Hulu will cost $19 monthly.

Citi said the results were in line with expectations, while BofA says it is "confident in [CEO] Bob Iger’s ability to navigate the company through this transition period," despite several remaining strategic questions.

Shares jumped some 4.9% to $91.76 Thursday.

Eli Lilly shares soar on earnings beat, guidance boost

Eli Lilly (NYSE:LLY) shares surged nearly 15% Tuesday after the pharma giant reported a much better-than-expected Q2 and lifted its full-year forecast.

Lilly reported EPS of $2.11 on revenue of $8.31B, crushing the consensus for earnings of $1.98 per share on revenue of $7.58B.

Mounjaro, the company’s flagship medication used for treatment of type 2 diabetes, generated $979.7M in Q2 sales, easily ahead of the expected $740.8M.

Full-year earnings are now expected at $9.80 per share, well ahead of the $8.71 consensus, and revenue is now seen at $33.65B vs. the expected $31.44B.

Following these results - and "outstanding" data out of Novo Nordisk (NYSE:NVO) trial of its own obesity-related drug - Jefferies upped Eli Lilly to Buy from Hold and raised its price target to $615 from $430.

The analysts believe the Novo data "opens the door to broader payer adoption & potential CMS [Medicare/Medicaid] coverage for the GLP-1 class" and said they see upside to Lilly's top and bottom lines.

UPS lowers 2023 guidance, citing costs related to tentative labor agreement

UPS (NYSE:UPS) on Tuesday lowered its full-year outlook and posted weaker-than-anticipated Q2 revenue, as the logistics firm was hit by labor negotiations and weaker U.S. consumer spending.

In July, UPS reached a tentative deal with Teamsters-backed employees to avert a strike that had the potential to disrupt shipments of around one-fourth of all U.S. parcel shipments. The Teamsters union said the UPS workers had called for better pay and working conditions, including air conditioning in new models of the group's famous brown trucks.

Citing the "volume impact" and "costs" associated with the agreement, UPS said it now expects lower full-year consolidated revenue of about $93B and adjusted operating margin of around 11.8%. The company had previously guided for a margin of roughly 12.8% on revenue of some $97B.

The company has previously flagged the impact of a recent pullback in customer expenditures on nonessential items, saying earlier this year that macro conditions will likely keep volumes under pressure.

The concerns were illustrated in the three months ended on June 30. Domestic U.S. revenue at the parcel deliverer slipped to $14.4B, following nearly a 10% decline in average daily volume that was only partially offset by higher prices. Analysts had projected the unit would register a top-line figure of $14.8B.

Total revenue slumped by 11% to $22.06B, missing Wall Street expectations. Adjusted earnings per share of $2.54 was down from $3.29 in the corresponding quarter last year, but topped estimates of $2.50 thanks in part to lower-than-anticipated operating expenses.

UBS and Loop Capital both slashed the stock to Hold Buy after the print. UBS said it expects "a backdrop of pressure on UPS's Domestic Package margin which is likely to extend through 2Q24" due to steeper Domestic Package volumes than expected and "clear visibility to significant year 1 Teamster contract cost pressures."

The firm added that the margin on the Domestic Package unit "is the greatest lever for UPS's EPS performance and we also view it as a primary driver for the stock price."

Shares slipped fractionally lower in Tuesday's session.

Alibaba income beats estimates amid "strong business momentum"

Alibaba (NYSE:BABA), the China-based e-commerce giant, on Thursday posted fiscal Q1 adjusted core income that topped analyst estimates, boosted by strong consumer spending during a major shopping event in China in June.

The tech heavyweight also said that its plans to split the company into six businesses will be implemented from the quarter ended June 30.

Recent economic data, including numbers earlier this week showing a contraction in consumer prices, have sparked concerns over a sluggish post-pandemic recovery in China, the world's second-largest economy.

But combined revenues at Alibaba's Taobao and Tmall retail platforms still grew by 12% in the June quarter to 114.95B yuan (1 yuan = $0.1387), fueled by increased purchasing activity during the 618 shopping festival.

Group-wide adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) climbed by 27% vs. last year to 52.05 billion yuan, above expectations of 44.77B yuan.

Meanwhile, Alibaba's cloud division rose to 25.12B yuan thanks in part to demand for its artificial intelligence computing products, in the latest sign of surging interest in the nascent technology.

U.S.-listed Alibaba shares closed up 3.7% Thursday.

Scott Kanowsky, Senad Karaahmetovic, Yasin Ebrahim, and Sam Boughedda contributed to this report.