Disney Stock Downgraded

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Disney Stock Market

The recent surge of COVID-19 cases has put reopening targets on hold for many U.S. companies. Even companies such as Walt Disney Co (NYSE: DIS) are reeling from the effects. On Thursday, an analyst at Cowen expressed their concern and downgraded Disney stock.

Cowen analyst Doug Creutz downgraded Disney from Outperform to Market Perform and cut his price target from $101 to $97. Disney dropped 1.8% contributing to the downside of Dow Jones on Thursday.

He argues Disney’s Parks and Film segments will likely be shut down longer than previously anticipated. The latest coronavirus trends doesn’t favor the company in their opinion. Disney has a large Park presence in Florida, and its movie business is in California, two of the hardest-hit states by the recent second wave of cases.

The Cowen analyst previously forecast an easing of social distancing restrictions by the end of 2020, but he now expects social distancing requirements will be extended until at least mid-2021.

Even after restrictions are lifted, Creutz said Disney’s Parks business will likely be slow to recover. He projects Disney’s domestic parks business will not return to 2019-level profitability until 2025.

Lastly, Cowen projects Disney will not release any movies in theaters until mid-2021 and will have only a modest slate of releases in fiscal 2021. He took this into consideration when downgrading Disney stock.

Source: Investor’s Business Daily

Kevin Koszola