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Barron's: Analyst Downgrades Disney, Wary of Streaming Bet

Barron's: Analyst Downgrades Disney, Wary of Streaming Bet
(Tyler Oneill/Dreamstime)

By    |   Wednesday, 19 June 2019 08:53 AM

Walt Disney Co. stock has slid in the wake of a downgrade from Imperial Capital “arguing that with the shares trading near a record valuation, the media giant may have run ahead of itself,” Barron’s recently reported.

Disney stock (DIS) has had a great year. The shares have gained nearly 30% this year, hitting a 52-week high of $143.51 and low of $100.35. Disney stock closed Tuesday at $139.24.

Disney has been on a financial winning streak with a record-breaking new installment in the "Avengers" franchise, strong robust earnings, and new "Star Wars" theme-park attractions, Barron’s explained.

Disney is preparing to launch its own streaming service called Disney+ on Nov. 12.

“Plenty of analysts are calling its coming streaming service, Disney+, a serious threat to Netflix (NFLX) and other media firms, giving it an edge in the rapidly changing world of broadcast television,” the report said.

Imperial Capital analyst David Miller earlier this week cut his rating on Disney to In-Line from Outperform, as the stock approaches his $147 price target, which he chose not to change, Barron's said. Miller says many of the factors that had originally prompted him to "take a bullish stance on the stock have already played out, or are fading."

He argues that Disney is expanding one business “at the expense of another.” It seems inevitable that Disney’s streaming services will ultimately replace its legacy networks, but that will “take a very long time, perhaps upwards of a decade,” leaving the current networks a source of worry, Barron's quoted him as writing.

In April, Disney priced its highly anticipated Disney+ below Netflix in an aggressive move to challenge the dominant streaming service and entice families to buy yet another monthly subscription.

Last month, Disney said said it will take full control of the Hulu service in a deal with Comcast Corp., as it vies for a bigger piece of the global video streaming market dominated by companies such as Netflix Inc., Reuters reported.

Comcast’s departure from the Hulu board will let Disney prepare unencumbered to expand the scope and reach of Hulu in the domestic and international markets to battle the likes of Netflix, Amazon.com Inc and Apple Inc.

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Walt Disney Co. stock has slid in the wake of a downgrade from Imperial Capital “arguing that with the shares trading near a record valuation, the media giant may have run ahead of itself,” Barron’s recently reported.
disney, downgrade, stock, streaming
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2019-53-19
Wednesday, 19 June 2019 08:53 AM
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