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Investment advisory company KeyBanc Capital Markets downgraded Disney’s stock last week due to concerns that growth has stalled for the Mouse House’s Disney+ and Hulu streaming services and lower attendance at theme parks.
The company’s stock price fell after KeyBanc analysts lowered Disney’s rating from overweight to sector weight on Wednesday.
According to Barron’s, analysts led by Brandon Nispel said, "While Disney appears less expensive versus its historical average, we believe the stock is unlikely to work until a number of items have line of sight to being resolved."
Nispel also claimed there would be a "deceleration of revenue" between the third and fourth quarters of the fiscal year.
The analysts were concerned by the slow subscriber growth of Disney+ and Hulu, as well as ESPN’s new streaming service possibly being priced too high. Additionally, low theme park attendance compared to company expectations contributed to the analysis.
Disney stock has fallen to its Friday price of $89.28 from a high of $200 in 2021.
Last month, it was revealed that Disney lost approximately $900 million on its combined eight releases last year, including Lightyear, Thor: Love and Thunder, Strange World, Black Panther: Wakanda Forever, Antman and The Wasp: Quantumania, Guardians of the Galaxy: Volume 3, Elemental, and The Little Mermaid.
The latest Indiana Jones installment is also performing well below expectations.
According to CNBC, the analysts also pointed out that though demand for sports on cable TV remains high, most customers aren’t willing to pay for ESPN streaming services yet.
Last week, The New York Post reported that ESPN laid off 20 on-air personalities, including some of the network’s biggest stars, such as Jeff Van Gundy, Max Kellerman, Keyshawn Johnson, Suzy Kolber, and Jalen Rose in an effort to save tens of millions of dollars.
CNBC also reported that Nispel said in a client note Wednesday, "We prefer to step aside, acknowledging meaningful uncertainty, and wait for further catalysts, as buying the dip has been a losing trade.”
KeyBanc predicted that the Mouse House would likely have to raise prices on Disney+ and Hulu and strategize on how to retain existing customers in a tiered system for those looking to avoid a price increase.
The company’s stock price fell after KeyBanc analysts lowered Disney’s rating from overweight to sector weight on Wednesday.
According to Barron’s, analysts led by Brandon Nispel said, "While Disney appears less expensive versus its historical average, we believe the stock is unlikely to work until a number of items have line of sight to being resolved."
Nispel also claimed there would be a "deceleration of revenue" between the third and fourth quarters of the fiscal year.
The analysts were concerned by the slow subscriber growth of Disney+ and Hulu, as well as ESPN’s new streaming service possibly being priced too high. Additionally, low theme park attendance compared to company expectations contributed to the analysis.
Disney stock has fallen to its Friday price of $89.28 from a high of $200 in 2021.
Last month, it was revealed that Disney lost approximately $900 million on its combined eight releases last year, including Lightyear, Thor: Love and Thunder, Strange World, Black Panther: Wakanda Forever, Antman and The Wasp: Quantumania, Guardians of the Galaxy: Volume 3, Elemental, and The Little Mermaid.
The latest Indiana Jones installment is also performing well below expectations.
According to CNBC, the analysts also pointed out that though demand for sports on cable TV remains high, most customers aren’t willing to pay for ESPN streaming services yet.
Last week, The New York Post reported that ESPN laid off 20 on-air personalities, including some of the network’s biggest stars, such as Jeff Van Gundy, Max Kellerman, Keyshawn Johnson, Suzy Kolber, and Jalen Rose in an effort to save tens of millions of dollars.
CNBC also reported that Nispel said in a client note Wednesday, "We prefer to step aside, acknowledging meaningful uncertainty, and wait for further catalysts, as buying the dip has been a losing trade.”
KeyBanc predicted that the Mouse House would likely have to raise prices on Disney+ and Hulu and strategize on how to retain existing customers in a tiered system for those looking to avoid a price increase.
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