Disney's Stock Downgraded Ahead Of Earnings, Analyst Sees Longer-Term Coronavirus Impact

Shares of Walt Disney Co DIS fell Monday after MoffettNathanson double-downgraded the stock.

The Disney Analyst

Michael Nathanson downgraded Disney's stock from Buy to Neutral with a price target lowered from $120 to $112.

The Disney Thesis

Nathanson's downgrade comes just one day before Disney is set to report quarterly results. The analyst sees multiple risks resulting in a "longer impact" to earnings and implies the financial damage to Disney from the coronavirus (COVID-19) pandemic will be "longer than most anticipate."

Disney is particularly vulnerable to the "second wave" of new cases after its parks reopen worldwide.

Disney investors will give the company a complete "pass" for the September-ending fiscal year and a pass to "some degree" next year as the global health crisis will continue.

"As economic pressures from COVID-19 become more evident, we expect to see further pressure on earnings, limiting the stock's performance for the near-to-medium term despite the company's strong position longer-term," Nathanson wrote in a note, according to The Hollywood Report.

Disney certainly has key assets to "win in this new world," but that's more than offset by the high amount of uncertainty which creates "significant and unrivaled earnings risk for the foreseeable future."

DIS Price Action

Shares of Disney were trading lower by 3.6% at $101.70.

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