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Disney Gets Two Chilly Analyst Reviews

By Anders Bylund – May 19, 2020 at 11:22AM

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One analyst firm downgraded the stock while another presented a 13% lower price target.

Family-friendly entertainment powerhouse Walt Disney (DIS 0.41%) got the cold shoulder from Wall Street on Tuesday. One analyst firm downgraded Disney's stock while another lowered its price target for the House of Mouse.

The downgrade

Loop Capital analyst Alan Gould lowered his Disney rating from a buy to a hold.

Gould argued that market makers are overestimating how quickly Disney can recover from the business damage of the COVID-19 pandemic and that Monday's executive-level reshuffling only increased the company's business uncertainty.

Photo of a teddy bear covered in bandages.

Image source: Getty Images.

Gould admits that Disney is "the premiere traditional media company," but that's not good enough when the entertainment market as a whole is walking on eggshells. And the Disney+ launch was impressive, but this firm still prefers Netflix (NFLX 0.98%) over Disney for investors seeking a position in the video streaming sector.

This report did not offer a target price for Disney shares.

The slashed price target

Separately, Deutsche Bank analyst Bryan Kraft maintained an existing hold rating on Disney's stock but lowered his price target from $147 to $128 per share.

Kraft said that Disney is "clearly facing unprecedented headwinds" in both the theme park and film studio divisions, and there's no quick fix for the coronavirus concerns. A full recovery can't be expected until there's an effective vaccine available to everybody or the virus becomes less of a threat due to simple herd immunity.

That will take a while, which leaves Disney crippled in two business segments that together accounted for more than half of the company's total revenue in 2019.

Anders Bylund owns shares of Netflix and Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short July 2020 $115 calls on Walt Disney. The Motley Fool has a disclosure policy.

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