Disney Stock Falls Again After UBS Downgrade From “Buy” to “Neutral”


Disney stock has again fallen again in early Monday trading as analyst John Hodulik from UBS downgraded his recommendation from “buy” to “neutral” in regards to the stock.

His reason is that due to the Coronavirus pandemic it is possible the parks won’t reopoen until early 2021. This goes along with the rumor we covered yesterday from a WDWMagic insider (who has been correct in the past) that stated Disney is planning for “worst case scenario reopening in 2021.”

Here’s what the analyst said:

The economic recession plus the need for social distancing, new health precautions, the lack of travel and crowd aversion are likely to make this business less profitable until there is a widely available vaccine.

According to MarketWatch he is also “..concerned that the company’s heavy exposure to live sports means that “its advertising trends will lead the industry down,” with some further risks down the road if college or professional football seasons are impacted by the COVID-19 outbreak.

They also pointed out that this was Disney’s 3rd downgrade this month.

His concerns likely stem from the announcements made by the governor in California that he won’t likely allow large gatherings until a vaccine is found. The Florida governor also indicated they would like to wait until it’s much safer, but doesn’t seem as strict in when that will be.

Personally, we do think the parks will be able to reopen sometime this year, but with guidelines like those listed by the Insider.

According to them, the Magic Kingdom will likely open first and be the only park open for awhile, with Disney’s Hollywood Studios and Disney’s Animal Kingdom opening up later on. EPCOT could remain closed for awhile.

When the Magic Kingdom opens it could be to limited crowds and could see strict sanitation procedures between riders, virtual queuing, mask requirements, limited restaurant offerings, temperature checks and health questions, and even possibly a waiver. You can read more about those possibilities HERE.

So even if the parks reopen it could be awhile until they open to full capacity with some opening much later. This too could impact stock prices down the road.

What do you think? Comment and let us know!

Source: MarketWatch, WDWMagic Insider


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