Disney
got a downgrade by analysts over fears growth at its video streaming unit has stalled and expectations for the parks division are too high.
KeyBanc analysts led by Brandon Nispel lowered the rating on
Disney
(ticker: DIS) shares to Sector Weight from Overweight and gave them a price target of $85.
“While Disney appears less expensive versus its historical average, we believe the stock is unlikely to work until a number of items have line of sight to being resolved,” they said in a note dated June 28.
They noted five key worries. Attendance at the U.S. theme parks has been weak, making the company’s targets for the year seem too ambitious. The Disney+ streaming service has seen sluggish subscriber growth. The price of the new ESPN sports streaming service looks too high. Content distribution isn’t as profitable as hoped, and the financial setup looks like last year, when shares fell, they said.
Disney fell 0.7% to $88.25 in premarket trading. Even after bringing back CEO Bob Iger, the stock remains well below the peak of almost $200 it hit in early 2021. The company has announced some 7,000 job cuts to help turn things around.
Write to Brian Swint at [email protected]
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