People visit the Magic Kingdom Park at Walt Disney World Resort in Lake Buena Vista, Fla., on April 18, 2022. (Ted Shaffrey/AP Photo)
Disney’s stock was downgraded by investment company KeyBanc Capital Markets over fears of stalled growth due to lower attendance at its Disney World and Disneyland theme parks and lower streaming viewership.
“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,” analyst Brandon Nispel wrote, Barron’s reported.
KeyBanc analysts reduced Disney’s rating from overweight to sector weight, coming as the firm carried out more layoffs at ESPN. The company, which also owns ABC News, announced layoffs earlier this year.
In a note, Mr. Nispel made reference to several areas of concern for Disney, including stalling direct-to-consumer subscriber growth, sagging content sales, a “materially harder” plan for ESPN to migrate to streaming, and fears that its U.S. theme park visits may stagnate.
“We prefer to step aside, acknowledging meaningful uncertainty, and wait for further catalysts, as buying the dip has been a losing trade,” he wrote to clients, noting that there are “more negative than positive [near-term] catalysts.”
Mr. Nispel also predicted that Disney will see a “deceleration of revenue” between the third and fourth quarters, according to reports. That comes in contrast to views expressed by executives at Disney, who have been bullish on revenue this year.
As of July 5, Disney’s stock stood at about $89. Even after it brought back CEO Bob Iger in recent months, the company’s stock remains far below its early 2021 peak of $200 per share.
