2 years Walt Disney Gets Analyst Downgrade Ahead of Earnings     

Walt Disney gets a downgrade ahead of its first-quarter earnings, which are expected to show a massive hit from the coronavirus pandemic and economic shutdown.

Walt Disney  (DIS) – Get Report on Monday received an analyst downgrade to neutral from buy as investors prepped for 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.

“Disney+ should be gaining strength from this crisis,” but it won’t contribute enough free cash flow “to offset the erosion elsewhere,” Nathanson added. The impact of the virus “will be longer than most anticipate,” especially given the risk of a second wave of infections.

Nathanson also lowered his one-year price target to $112 from $120. In premarket trading on Monday, shares of Disney were down 2.42% at $102.95.

How Disney+ Will Impact Disney’s Stock in 2020 (; 2:18)

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.

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.

That move prompted S&P Global to downgrade the company’s debt rating to A-minus from A, even though the company did manage to secure a new credit agreement for as much as $5 billion to help tide it over economically.

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. 

Disney Chairman Bob Iger also stepped down as CEO earlier this year.

Separately on Monday, Morgan Stanley trimmed its one-year price target on Disney to $125 from $130, citing “a more conservative outlook on initial Parks utilization and traditional TV headwinds.”

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