Citi Latest To Cut Target on Disney Stocks


Yet another analyst has cut his targets on Disney stocks amid the shutdowns. Citi Research analyst Jason Bazinet has lowered his target price on Disney stocks from $161 to $135 and according to Market Watch, he also lowered his 2020 estimates for adjusted earnings. Taking his numbers from $5.57 per share down to $2.91 per share in 2020 and from $6.14 per share down to $5.18 per share in 2021.

Bazinet also mentioned that “the impact of COVID-19 appears to be largely priced into the firm’s equity.” Even when the parks re-open the recovery will be gradual, like we’ve been saying.

After reopening, we expect Disney’s parks and hotels business to recover gradually.” He estimates that the attendance will be down about 25% in the 2021’s first-quarter. As 2021 progresses he expects each quarter to have attendance gains, but overall he estimates a revenue loss of 9%.

The analyst also mentioned that there could be some gains with “direct to consumer apps,” but ultimately, as many of us already know, it’s a “mixed bag.”

On the other hand, the direct-to-consumer apps will likely see a tailwind from COVID-19. So, on the COVID-19 Impact dimension … Disney is a mixed bag. But, it tilts to the downside.

None of us have a crystal ball. All we can do is look at the information in front of us and make the best possible guesses based on facts and trends. But overall I tend to agree that it will take awhile for Disney to come back to where it was. Even when the parks and theaters reopen the restrictions and fear will limit the number of people that will go. There’s no other way to assess the situation other than it’s going to be a long haul until places like amusement parks, festivals and movie theaters return to normal. Since Disney’s business model is based mostly on crowds, it stands to reason that it is going to take time for everything to come back to where it was and I fully expect it to be changed when it does. It looks like we aren’t the only ones that think so.

That being said, I do believe the stocks will eventually rebound somewhat, when it dips low we plan on buying some more.

What do you think? Comment and let us know.

Sources: Market Watch, The Street

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