Disney Stock Down After Furloughs, Analysts Downgrade

After news Disney is furloughing 100,000 employees — half its workforce — because of business shutdowns due to the coronavirus pandemic, Wall Street April 20 at the opening dropped the media giant’s stock more than 3%.

Disney, which is telling affected staff to seek state and federal financial assistance, said the furloughs would save the company $500 million monthly while it continues to pay employee healthcare and related benefits.

Wall Street analysts responded in force.

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John Hodulik with UBS downgraded the stock to “neutral” from “buy,” cutting his price target to $114 from $162. The analyst contends Disney is facing a long road to recovery, especially in its theme park and cruise businesses — both, he believes, will not be fully operational until Jan. 1, 2021.

“[They] will be impaired for a longer period of time,” Hodulik wrote in a note.

Meanwhile, Credit Suisse dropped its rating to “neutral” from “outperform” due to similar concerns about Disney’s amusement parks business.

Analyst Doug Mitchelson remains positive on Disney long-term, saying liquidity issues appear overblown and eyeing a return to $160 per share from its current $102 price.

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“We expect a full rebound in theme park and Hollywood operations over time,” he wrote with the caveat that the mid-term outlook remains challenged. “We expect Disney will remain in a more narrow trading range given a remarkable lack of operational visibility, expected severe cuts coming to street estimates, and a now more equally balanced mix of positive and negative catalysts.”

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