May the 4th Is Not With Disney, At Least Not This Year

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Despite it being the quasi Star Wars, 'May the 4th be with you' celebratory holiday on Monday, the force appears to be against Walt Disney  (DIS) - Get Report

The theme park and entertainment juggernaut received an analyst downgrade to neutral from buy on Monday ahead of the company’s first-quarter earnings, which are expected to have taken a massive hit from the coronavirus pandemic and economic shutdown.

In a note to clients, MoffettNathanson analyst Michael Nathanson wrote that earnings revisions for the theme park and entertainment giant could be “massively skewed to the downside” as a result of the pandemic, even as Disney+ continues to attract subscribers.

“The uncertainty of the present situation creates significant and unrivaled earnings risk for the foreseeable future,” the analyst wrote, adding that he expects to see Disney accelerate cost-cutting as it continues to smart from a steep pullback in advertising revenue.

Nathanson also lowered his one-year price target to $112 from $120.

Disney is expected to report earnings of 93 cents a share on revenue of $18 billion when it reveals its first-quarter earnings on Tuesday, according to analysts polled by Factset.

In addition to scuttling its travel experiences, movie theater closures have cut ticket sales, while the suspension of almost all major league sports has cut into its ESPN programming. 

The Burbank, Calif., entertainment earlier last month said it was furloughing 43,000 Disney World employees amid the ongoing closure of its theme parks, which have been shuttered since mid-March due to concern about the spread of the coronavirus. 

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