Disney Price Target and Earnings Estimates Lowered by Citi

A Citi analyst lowered his share-price target and earnings estimates on Walt Disney due to the impact of the coronavirus.
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A Citi analyst lowered his price target on Walt Disney  (DIS) - Get Report Tuesday to $135 from $161 and cut his earnings estimates to reflect the impact of the coronavirus pandemic on the entertainment giant.

Shares of the Burbank, Calif., company at last check were down 1.6% to $100.65.

Citi analyst Jason Bazinet did affirm his buy rating on the Mouse House, even though several Disney segments have been hurt by the potentially deadly outbreak.

"At current levels, the impact of COVID-19 appears to be largely priced into the firm’s equity," Bazinet said. 

"And, over time, we expect the business to gradually return to 'normal' and investors to continue to embrace the firm’s direct-to-consumer pivot."

Bazinet cut his 2020 earnings estimate on the company to $2.91 from $5.57 a share and his 2021 estimate to $5.18 from $6.14.

On Monday, Disney said it would stop sending paychecks to more than 100,000 employees, mainly cast members, starting this week in an effort to save cash as the coronavirus lockdown continues.

Last week, the company said it would furlough 43,000 Disney World employees as the theme park remained closed since mid-March due to the spread of the coronavirus.

Bazinet said Disney "will see material headwinds at the parks segment."

"And, ad exposure and diminished theatrical revenues will also pose incremental financial pressures," he said. 

"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."

Bazinet said he expected Disney's shuttered theme parks, hotels and retail stores to remain closed through the end of September.

"After reopening, we expect Disney’s parks and hotels business to recover gradually," he said.

He forecast that "attendance will be down about 25% in first-quarter 2021, with smaller declines each quarter as the fiscal year 2021 unfolds. As a result, we lower our 2021 segment revenue forecast by 9%."