Walt Disney (DIS) - Get Walt Disney Company Report shares were downgraded at Cowen due to the prolonged impact from the coronavirus pandemic, particularly in the entertainment giant's two key markets, Florida and California.
Analyst Doug Creutz cut the shares of the Burbank, Calif., company to market perform from outperform and trimmed his price target to $97 from $101.
Disney shares at last check fell 2.6% to $117.81.
"[Disney] is well-managed and has many attractive content assets," Creutz wrote.
Disney+, the streaming division, "is off to a very strong start, which we believe is the key variable governing stock performance."
However, he's concerned about the media group's long-term strategy following its acquisition of Fox as well as the effects of the coronavirus.
"While we think Disney will remain a core holding for many portfolios due to its high quality, ... the story around the stock is likely to get worse before it gets better due to the path the virus is taking in the U.S.," Creutz wrote.
California and Florida, homes to Disney's key theme parks, are seeing sharp spikes in the coronavirus outbreaks.
The pandemic also increases the prospect that movie theaters are going to remain closed for an extended period.
And that means the company's highly profitable studio unit will be suffering along with its theme park segment, which is the company's biggest money maker.
"We are also leaving our advertising estimates untouched for the time being, though the extended U.S. epidemic we now expect could well do further significant damage to the economy," Creutz wrote. And that could result "in a deeper pullback on advertising spend."