Please ensure Javascript is enabled for purposes of website accessibility

Dow Jones News: Disney Price Target Is Cut; Home Depot Makes Adjustments

By Timothy Green – Updated Apr 1, 2020 at 12:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst sees less upside for Disney due to the pandemic, and Home Depot takes precautions at its stores.

A change in tone from President Trump regarding the coronavirus pandemic may have contributed to the stock market decline on Wednesday. Trump warned that the next two weeks will be painful, even with social distancing in effect. The Dow Jones Industrial Average (^DJI) was down 3.5% at 12:10 p.m. EDT today.

Johns Hopkins University now puts the total confirmed cases in the U.S. above 190,000, with more than 4,100 deaths. Both numbers will likely rise sharply over the next two weeks.

Shares of Disney (DIS -0.75%) and Home Depot (HD 0.19%) were down on Wednesday along with the overall market. Disney slumped after an analyst reduced his price target, while Home Depot trended lower after the retailer provided a business update.

Disney price target slashed

Disney was flying high before the pandemic. The stock soared more than 30% in 2019, driven by a record year at the box office and the successful launch of the Disney+ streaming service. The parks, experiences, and products segment, Disney's largest, produced solid growth as well.

Disney characters.

Image source: Disney.

It's safe to say that 2020 is going to be a very different story. Disney has been forced to close its parks due to the pandemic; professional sports are on hiatus, dealing a heavy blow to ESPN; movie theaters are closed in many places, gutting Disney's movie business; and nonessential retail stores are shuttered, likely hurting sales of Disney-related merchandise.

On top of the short-term impact of the pandemic, the economic recession caused by the mass closings could stick around longer than the virus itself. With millions losing their jobs across the country, Disney may take quite awhile to fully recover.

Morgan Stanley analyst Benjamin Swinburne, while still bullish on Disney stock in the long run, cut his price target from $170 to $130 on Wednesday to reflect the impact of the pandemic and the recession on Disney's business. With shares trading around $96, the new price target still represents upside of about 35%.

One silver lining for Disney: Its Disney+ streaming service will likely flourish as people are forced to stay home due to the pandemic. Unfortunately, it won't be nearly enough to offset the pain. Disney stock was down about 2.3% by early afternoon today. Shares are down 37% from their 52-week high.

Home Depot adjusts to the pandemic

How home improvement retailer Home Depot performs during the pandemic and the resulting recession is up in the air. Stockpiling by consumers may have boosted sales of certain items in March, but a deep recession isn't going to do the blue chip retailer any favors.

Like many retailers, Home Depot is taking steps to reduce risks for customers and employees. The company announced Wednesday that it would begin closing stores early to allow more time for cleaning and restocking. Home Depot will also limit the number of customers allowed into the store, add markings and signage to promote social distancing, cancel its spring promotions to reduce traffic levels, and limit services and installations.

These steps will likely hurt its results, but they're necessary given the rapidly spreading virus. The big question: How quickly does the retailer recover once the pandemic is over? With job losses piling up, demand for things like major home improvement projects and appliance upgrades may be slow to rebound.

Home Depot stock had slumped about 3.7% by early afternoon. Shares are now down roughly 27% from their 52-week high.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Home Depot and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney, long January 2021 $120 calls on Home Depot, short April 2020 $135 calls on Walt Disney, and short January 2021 $210 calls on Home Depot. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
$100.04 (-0.75%) $0.76
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
$290.39 (0.19%) $0.54
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.