Analysts remain bullish on the outlook for Walt Disney (DIS) - Get Report even as shares of the entertainment giant have taken a beating in a brutal week for the market amid a transition at CEO and escalating coronavirus fears.
After a sit-down with Disney senior management, analysts at J.P. Morgan in a research note offered a thumbs-up on new CEO Bob Chapek, writing the 27-year veteran of the company is "extremely qualified for the job."
The analysts, who are sticking with an outperform rating and a price target of $117.20 on Disney, wrote they were also assured former CEO Bob Iger will remain intricately involved with the company in his new role in charge of creative as executive chairman.
Still, the analysts acknowledged that Disney had taken a particularly hard hit this week, with shares down 15% through Thursday, compared to the S&P's 11% decline, and that the transition at the top may have added to investor jitters.
Disney's stock price fell further on Friday, dropping 3% to $114.50 a share, amid the larger coronavirus market rout and news that Tokyo Disneyland will close until mid-March as the epidemic spreads in Japan.
"Disney shares have pulled back … on fears of Covid-19 further impacting Disney's business, and we believe, to a lesser degree, the management transition," the J.P. Morgan analysts wrote.
Analyst Douglas Mitchelson at Credit Suisse, who also met with Disney management, kept his outperform rating on the entertainment giant's stock and a $163 a share price target, which envisions considerable upside.
The Credit Suisse analyst noted that revenue lost from any Disney park closures as a result of the Covid-19 epidemic may only be temporary, with consumers, based on past disruptions, opting simply to take their trips at a later date, rather than canceling them altogether.